Patra, who was speaking at an event hosted by the PHDCCI here in this city, made the following statement: “If the monsoon brings with it a more favourable perspective on food prices, India will have controlled the inflation situation even earlier (than two years).”
Inflation at the retail level is expected to return to the middle point of the medium-term target range of the Reserve Bank of India (RBI), which is between 2 and 6 percent, within the next two years, according to the deputy governor Michael Patra, who stated this on Friday. The RBI has set this range at between 2 and 6 percent. He voiced his belief that “the requisite monetary policy steps in India will be more mild than elsewhere in the globe.” [Citation needed] Patra warned, however, that the fight against inflation is not going to be “painless,” which is an indication of the negative impact that inflation has on the economy.
Yields on 10-year government securities increased by 5 basis points during intraday trading on Friday, in response to the statements; however, they later eased off a bit before settling up slightly at 7.43 percent, which was a tiny gain from the previous day.
Patra, commenting on the depreciation of the rupee, stated that the central bank is intervening in the foreign exchange market in order to prevent undue volatility and that it will not tolerate “disorderly, jerky movement” of the home currency. Patra was referring to the movement of the rupee. On Friday, the value of one rupee was worth 78.33 U.S. dollars, marking a new low for the currency. In addition to this, he noted that the rate of the rupee’s depreciation is one of the lowest in the world. This year, the value of the local currency has decreased against the dollar by more than 5 percent, which is lower than the losses of almost 7 percent experienced by the Philippine peso and 8 percent by the South Korean won.
Patra, who was speaking at an event hosted by the PHDCCI here in this city, made the following statement: “If the monsoon brings with it a more favourable perspective on food prices, India will have controlled the inflation situation even earlier (than two years).”
Inflation at retail fell to 7.04 percent in May from a 95-month high of 7.79 percent in April. This was due to a moderation in price pressure across both core and food categories, which was somewhat assisted by a relatively favourable base. Nevertheless, for the sixth consecutive month, it has stayed in a territory that is considered unsafe by the RBI.
He emphasised that the forecast for inflation is “tethered to the situation in Ukraine,” but he also hinted that the central bank won’t “sit on our hands and do nothing in a fatalistic attitude.”
Patra, on the other hand, observed that there were “indications that inflation may be peaking” in India. [Citation needed] At the same time, he maintained his adherence to the most recent assessment made by the monetary policy committee, which said that retail inflation may continue to be higher than the objective set by the central bank for the next three quarters.
“Without a shadow of a doubt, the repercussions of global uncertainties will bring about an extremely reluctance-inducing drop in inflation…
“But India will succeed in bending down the future trajectory of inflation, winning the war in spite of losing the battle,” said Patra, who is the deputy governor in charge of monetary policy. “The war will be won in spite of losing the battle.”
Since May, the federal reserve has already increased the repo rate by 90 basis points, and it is widely anticipated that it would increase the rate once more in August as part of its efforts to rein in the rising pace of inflation.
The recovery that is gradually becoming more stable has a good chance of gaining traction if real GDP growth averages between 6 and 7 percent in this fiscal year and the next (the RBI’s latest prediction for GDP growth for FY23 is 7.2 percent). According to what the deputy governor had to say, “The RBI will have achieved its duty of prioritising price stability while being cognizant of growth.”
Patra stated that it was vital to manage the second-round impact that increased prices had, even if the RBI did not have the authority to control the prices of food and gasoline.
According to the study conducted by the central bank, it is essential to maintain an inflation rate that is lower than 6 percent, which is the top range of the objective, because higher price pressures “unambiguously” damage economic growth.
In the event that the Reserve Bank of India (RBI) is unable to bring inflation down to a level that is within the range that has been prescribed for three consecutive quarters, the RBI will be required to send a letter to the government outlining the reasons for their failure and suggesting possible corrective actions.