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Oct Retail Inflation To Be Below 7%, Says Rbi Governor | Mumbai News

Mumbai: Reserve Bank of India governor Shaktikanta Das said on Saturday that the consumer price inflation numbers for October, which are to be released next week, will be below 7%. The governor also said that while there was a global debate on whether interest rates would end up being high for too long, it was too early to discuss whether the approach to inflation needs to change.
Das, who took office after his predecessor Urjit Patel’s exit following a heated debate on the central bank’s autonomy, said that during Covid, even purists had realised the importance of coordination between the monetary and fiscal authorities.
Speaking at a leadership summit organised by a media organisation, Das said India was taking leadership of G-20 at a time when it was among the fastest-growing economies with strong fundamentals. This was when countries were reeling under the triple shock of Covid-19, the war in Ukraine and financial market turmoil following the synchronised monetary policy tightening in developed markets led by the US.
“The upper ceiling for our inflation tolerance is 6%. Inflation, which was 7.4% in September, is expected to be lower than 7% in October,” said Das. He added that any inflation above 6% is detrimental to growth, and the goalpost should not be changed because the target could not be met. “We stay committed to bringing down inflation. Internationally there is a debate now starting whether the interest rates being ‘low for long’ is moving to an era of ‘high for too long’.
While every country will have to analyse what they want to do internally, we stand committed to the current target of 4%, which gives us enough flexibility to deal with crises and shocks,” said Das.
He said that this was not the time to debate whether inflation should be dealt with differently. “If the conflict continues to simmer without being a major war, supply chains will get restored and we will see an earlier end to global inflation than the `high for long’ that I spoke about,” said Das. He said debating on whether the inflation target will hurt the credibility of the central bank.
On the exchange rate, Das said that the central bank had added $240 billion to its reserves during the pandemic with the idea that there would be a reversal someday. “We built up the reserves only for this rainy day. Our reserves are very comfortable, “he said. Das added the central bank has to intervene to anchor expectations and ensure exchange rate stability which is at the heart of financial sector stability.

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