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India central bank committed to inflation target, says chief

NEW DELHI (CNA) – India’s central bank is committed to its inflation mandate and the likely uptick in January inflation towards the upper end of its target band should not create any panic, central bank chief Shaktikanta Das (CNA pic below) said yesterday.

“Today’s inflation print is expected to be around six per cent. So that should not surprise or create any alarm, because we have taken that into consideration,” Das said.

“There’s a sort of major delicate balance between inflation and growth and the Reserve Bank is fully aware of its commitment to inflation,” he added.

Das made the comments after a meeting with the country’s finance minister and the central bank’s board in a customary post-budget meeting.

India’s retail inflation likely accelerated to 6.0 per cent in January, driven by higher consumer goods and telecom prices along with a comparatively low rate a year ago, a poll found.

Das reiterated that the inflation trajectory in India was on a downward slope since October and despite global crude oil prices having spiked in recent weeks the central bank had taken into account all scenarios. Last week, the RBI’s monetary policy committee kept rates and its stance unchanged to ensure a broad-based recovery and projected retail inflation to ease to 4.5 per cent in the next fiscal year.

Das also said the Reserve Bank of India RBI is working on the borrowing programme for the next fiscal year, while the country’s inclusion in global bond indexes is also a work in progress.

The government is scheduled to borrow as much as INR14.95 trillion from the market next fiscal year, with traders hoping the RBI will step in to help the market absorb the supplies, by announcing open market bond purchases or other steps.

Das said the government’s decision to sell sovereign green bonds will also help widen the foreign investor base.