https://www.thehindubusinessline.com/opinion/mpcs-pragmatic-course/article67181243.ece
However, the central bank was emphatic in conveying its preparedness to act if the situation demands in the coming months.
Indeed, while inflation has surged of late, it has largely been driven by food items. No other segment made a large contribution.
Typically, price spikes of the current nature often start softening in 2-4 months. RBI Governor Shaktikanta Das has rightly highlighted that supply-side interventions would remain critical to manage inflation going forward.
Accordingly, unless the ongoing weather disruption worsens further, despite the sharp rise at the moment, CPI may start softening by the next quarter. Furthermore, one notes, WPI (wholesale price) inflation averaged a drop of 2.8 per cent y-on-y during 2023-24 so far, reiterating that inflationary pressures are modest beyond the food items.
Thus, the RBI justifiably refrained from any rate action immediately, even though another hike in the coming months cannot be ruled out. In that context, the MPC meeting in early-October remains a live one. Apart from India’s inflation dynamics, the action and guidance of the US Federal Reserve in late-September will play a crucial role in influencing the global policy rate cycle, including that of India in October. The Fed continued to stay data dependent and has kept all their options open for the coming months.
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