The Reserve Bank of India (RBI) Governor, Shaktikanta Das, emphasised the central bank's cautious stance on inflation and hinted that any potential rate cuts would be contingent on sustained stability in inflation levels.
Speaking at the post monetary policy press conference, Governor Das once again used the metaphor of an "elephant" to describe the current state of inflation, noting it has declined slowly.
"The elephant (Inflation) is walking very slowly, and we are watchful about this. It is around 4.9 per cent, 4.8 per cent and earlier it was 5 per cent. Our target is 4 per cent for inflation and we hope it goes the soon and most importantly it should stay there," said Das.
He underscored the importance of not just achieving the inflation target but stabilising it for a longer period before considering any monetary policy changes.
The central banks projected the inflation to come down to 3.8 per cent in Q2 FY25 but it will again go up to 4.6 percent in Q3 and 4.5 per cent in Q4 of FY 25.
The RBI has set an inflation target of 4 per cent, a benchmark that reflects the central bank's commitment to maintaining price stability.
The latest inflation figures show a gradual decline, with the current rate hovering around 4.9 per cent and 4.8 per cent , down from previous levels of 5 per cent .
Despite this progress, Governor Das highlighted the need for caution, indicating that the central bank is closely monitoring the inflation trajectory to ensure that it stabilizes at or below the target level.
"Only being sure of its stability within our targets then only we will think about change in our monetary policy, I won't say that a cut in the rates," he added.
Das's remarks suggest that the RBI is prioritizing long-term stability over short-term gains. The central bank's approach indicates a preference for a conservative and data-driven policy response, ensuring that any decision to alter interest rates is backed by sustained improvements in inflation metrics.
The RBI's cautious stance comes against the backdrop of global economic uncertainties and domestic challenges. The central bank is hopeful of a normal monsoon to ease food inflation.
Inflation in India has been driven by various factors including fluctuations in global commodity prices, supply chain disruptions, and domestic economic policies.
The central bank's primary objective is to maintain price stability, which is crucial for economic growth and consumer confidence.
Governor Das's metaphor of the inflation "elephant" moving slowly but steadily reflects the central bank's vigilance and the complexity of managing inflation in a dynamic economic environment. (ANI)
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