In letter to Centre, RBI MPC blames global factors for high inflation
India’s interest rate setters have blamed global factors primarily for the failure to meet its inflation targets, according to people with knowledge of a letter the monetary policy panel was obliged to write to the government.
The war in Ukraine and its resulting rise in energy and food costs, and supply disruptions due to the pandemic, have been cited as the main reasons, said the people, asking not to be identified as the correspondence is private. The details didn’t delve much into the path forward, the people said, saying only that the worst of inflationary pressures are probably behind us.
Little is known about the contents of the letter sent earlier this month, after India’s consumer inflation topped the upper limit of the 2%-6% band for three consecutive quarters. While a panel headed by Reserve Bank of India governor Shaktikanta Das was forced by law to explain its failure to limit prices, the government was not required to make the information public.
This is in line with what Das has said publicly about inflation having peaked. Economists polled by Bloomberg expect the benchmark repo rate to rise to 6.4% from 5.9% currently, and inflation to ease from 6.8% to around 5% in a year. A spokesperson for the finance ministry declined to comment. An email sent to RBI for comment was not immediately replied to.