The monetary policy committee (MPC) believes that the inflation outlook is uncertain at this point, RBI Governor Shaktikanta Das said on Friday. The elevated level of pulses inflation is worrisome and immediate step-up of open market sales can cool down cereal prices, Das also said in his third address amid the ongoing lockdown. "Exports have suffered their worst slump in the last 30 years. Food inflation has increased to 8.6% in April 2020," Das said.
The headline inflation is expected to remain firm in the first half of 2020 and should ease in the second half of 2020, aided by favourable base effects, he also said. "More space will open up to address risk to growth if the inflation trajectory remains as expected," RBI Governor said in the statement.
"Given the current global demand-supply balance, international crude oil prices are likely to remain low although they may firm up from the recent depressed levels. Soft global prices of metals and other industrial raw materials are likely to keep input costs low for domestic firms," RBI said.
"Deficient demand may hold down pressures on core inflation (excluding food and fuel), although persisting supply dislocations impart uncertainty to the near term outlook. However, volatility in financial markets could have a bearing on inflation. These factors, combined with favourable base effects, are expected to take effect and pull down headline inflation below target in Q3 and Q4 of 2020-21," it also said.
Earlier, RBI announced a cut in repo rate by 40 bps. The reverse repo rate now stands at 3.35 per cent."COVID Pandemic has crippled the global economy. We must have faith in India's resilience & come out of all odds," RBI Governor said in the third message via video conference. The first address by Shaktikanta Das amid the lockdown was on March 27 and the second was on April 17.
Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday announced an extension in the moratorium on payment of all term loans by another three months to help borrowers.
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