Shaktikanta Das expects inflation to be moderate in the second half of the current year.
RBI Governor Shaktikanta Das addressed the annual event in the Fixed Income Money Market And Derivatives Association Of India (FIMMDA) on Monday and said that the central bank is expecting the price index to cool off from the second half and moderate further from the fourth quarter.
Das further mentioned that the central bank and government have taken enough measures, such as maintaining high forex reserves (USD 561 billion as of August 26) and other steps to keep the banking system healthy enough to withstand any external headwinds.
Mr Das said that India's forex reserves at $561 billion provide a "cushion" for "daily" shocks which helps the central bank step in and shore up the rupee from extreme volatility, noting the rupee had moved in an orderly manner at a time of sharp depreciations in other currencies.
He gave the assurance that the central bank is present in the market every day to prevent excessive volatility in the rupee and to set expectations around its depreciation. The rupee has outlasted the storm since the US started raising rates and has been one of the best performing emerging market units.
The rupee has lost only 4.5 per cent against the dollar, while all other currencies lost much higher, he said.
The RBI Governor emphasised about inflation and stated that "While the incoming inflation prints in the near term could be bumpy, we expect it to moderate in the second half of the current year”.
India’s Consumer price-based (CPI) inflation eased to 6.71 percent in July on an annual basis, from 7.01 percent in June, owing to easing food and oil prices. Sequentially, the headline inflation slowed to 0.46 percent from 0.52 percent in the previous month.
The governor also said the central bank and the government are working on issuing sovereign green bonds.
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