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No evidence of high asset prices feeding in general inflation: Shaktikanta Das

No evidence of high asset prices feeding in general inflation: Shaktikanta Das

Shaktikanta Das says the CPI inflation will gradually moderate from now on. At this point, the RBI is quite optimistic to achieve the projected 9.5 per cent growth in 2021-22, he adds

Reserve Bank Governor Shaktikanta Das Reserve Bank Governor Shaktikanta Das

Reserve Bank of India (RBI) Governor Shaktikanta Das today said there is no evidence of high asset prices, namely the high stock prices, feeding in general inflation. "There is surplus liquidity and the stock prices are very high and are booming in almost every market, including India, but there is no evidence and to some extent, the current high stock prices in India have been influenced by any excess liquidity," the RBI Governor said during a virtual banking and finance seminar.

The RBI Governor said that retail or the consumer price index (CPI) inflation will gradually moderate from now on.

"The possibility of a sustained increase in inflation of over 6 per cent is highly unlikely at this point of time. Nonetheless, we are watchful. We are very serious about anchoring inflation expectations, and anchoring the inflation around the target," he said.

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The RBI Governor said the earlier stance that the current inflation is mainly driven by supply-side factors, partly because of international factors, was built around high commodity prices.

He added the uncertainty of the possible 3rd Covid-19 wave, that people are talking about, remains. At this point, the RBI is quite optimistic to achieve the projected 9.5 per cent growth in 2021-22, he added.

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The first-quarter GDP growth of 20.1 per cent has come in line with the RBI's projections, he said. "The second quarter of the current year that is the current quarter will do better sequentially than the previous quarter. But there is a base effect of last year, which will have its impact throughout this year, but the base effect will gradually moderate going forward," said Das.

In August monetary policy, the RBI had revised the GDP growth projections to 21.4 per cent in the first quarter,  7.3 per cent in the second quarter,  6.3 per cent in the third quarter and 6.1 per cent in the fourth quarter of 2021-22. The RBI's full-year projection for GDP is 9.5 per cent.

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