How do we describe the undertone of the policy?
It depends on how we read the RBI Governor Shaktikanta Das’s statement.
He has brushed aside the sudden rise in consumer price index (CPI) inflation, driven by food prices shock, and looked through this as an “idiosyncratic shock” even though he has raised the inflation projection for the current financial year.
The market seems to be happy with the RBI reading that the inflation is not here to stay put. In fact, the bond yield dropped marginally after the policy announcement.
But if we take a long shot, the landscape looks different. Inflation will continue to remain high even in the next financial year, beginning April 2024. For the first time, the RBI has given its retail inflation estimate for the first quarter of FY25. It’s 5.2 per cent, well above the target.
aniltikotekar4sme.com 