RBI Projects Average Inflation of 4.3% by Early 2025 Amid Remedial Actions

The Reserve Bank of India (RBI), under the leadership of Governor Shaktikanta Das, is addressing its ongoing challenge of keeping inflation within its targeted tolerance band of 2-6% for three consecutive quarters. This is in accordance with Section 45ZN of the RBI Act of 1934 and Regulation 7 of the RBI’s Monetary Policy Process Regulations of 2016. The RBI has initiated a plan to bring inflation down to 4% over the next two years.

The need for action was prompted by the Consumer Price Index (CPI) inflation rate, which hit 7.41% in September 2022, surpassing the target range. In response, the RBI announced a series of corrective measures, including raising the policy repo rate to 6.5%, a move that received backing from Jayanth Varma of the Monetary Policy Committee (MPC).

Although inflation has remained above the target for four consecutive years, the RBI maintains a positive outlook for future trends. The bank forecasts an average inflation rate of 4.3% by early 2025, with the possibility of rates dipping below 4% during the July-September quarter of 2024.

Governor Das has acknowledged the global and domestic uncertainties that could affect these predictions but remains confident in the implemented strategy. He expressed optimism about achieving the inflation target, indicating a constructive perspective on India’s inflation management.