According to those aware of a letter to be written by the monetary policy panel to the government, the Reserve Bank of India’s rate setters have primarily blamed global factors.
The war in Ukraine and the resulting sharp increases in energy and food costs, and supply disruptions caused by the pandemic are some of the main reasons cited, said the people, who asked not to be identified as the correspondence is private. The detailed story doesn’t dwell much on the way forward, stating only that the worst inflationary pressures are probably behind us, the people added.
Little is known about the contents of the letter sent earlier this month after consumer inflation in India hit the upper limit of the 2%-6% range for three quarters in a row. While the panel headed by Reserve Bank of India Governor Shaktikanta Das was required by law to explain the failure of the price cap, the government is under no obligation to disclose the information.
The outlook is in line with what Shaktikanta Das has said publicly about the spike in inflation. Economists polled by Bloomberg predicted that the reference repo rate would rise from 6.4% to 5.9% today, and that inflation would fall from 6.8% now to about 5% in a year’s time.
A spokesman for the Treasury Department declined to comment. An email to the RBI for comment was not immediately answered.
(Except for the headline, this story has not been edited by DailyExpertNews staff and is being published from a syndicated feed.)
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