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Synopsis: The Reserve Bank of India (RBI) has projected Consumer Price Index (CPI) inflation at 4.5% for FY2024-25. Governor Shaktikanta Das highlighted that inflation risks are balanced, with a potential moderation in core inflation, despite persistent food price volatility. The central bank maintained the repo rate at 6.5%, emphasizing continued vigilance in managing inflation and liquidity.
In its latest monetary policy review, the Reserve Bank of India (RBI) has forecasted an average CPI inflation rate of 4.5% for the fiscal year 2024-25. Governor Shaktikanta Das indicated that this projection reflects a gradual decline from the higher levels seen in previous years. The breakdown of inflation expectations shows 4.9% in Q1FY25, followed by 4.4%, 4.7%, and 4.3% in the subsequent quarters. For FY2025-26, inflation is expected to average 4.4%.
The central bank's stance remains cautious, particularly in the context of ongoing food price pressures, which have been a significant driver of inflation. Despite a decline in core inflation, challenges persist due to rising food prices, especially in the first quarter of FY25, where food inflation surged to 9.55% in June. This has slowed the anticipated disinflation process.
The RBI has decided to keep the key policy rate—the repo rate—unchanged at 6.5%, marking the ninth consecutive time the rate has been held steady. This decision aligns with market expectations and underscores the central bank’s focus on maintaining price stability while supporting economic growth.
Governor Das emphasized that while the overall inflation trajectory is moderating, the RBI remains vigilant. The policy will continue to prioritize maintaining inflation below the 4% target, acknowledging the substantial influence of food prices on the inflation outlook.
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