New Delhi: The Reserve Bank of India expressed increased confidence in achieving its inflation target of 4 percent within the next twelve months, citing recent benign consumer price inflation data in its annual report for 2024-25 released Thursday.
The central bank’s assessment reflects a notable shift in the inflation trajectory, supporting expectations for monetary policy adjustments aligned with economic growth requirements.
The monetary policy committee has implemented accommodative measures since February, reducing the policy repo rate by a cumulative 50 basis points and formally adopting a growth-supportive stance in April.
These decisions underscore the central bank’s strategic focus on supporting economic expansion while maintaining price stability objectives.
The RBI projects headline inflation at 4 percent for fiscal year 2026, alongside gross domestic product growth expectations of 6.5 percent.
However, the report identifies significant external risks that could impact both growth and inflation trajectories.
Global trade uncertainties following protectionist policy implementations, persistent geopolitical tensions, and international financial market volatility present downside risks to growth while potentially creating upward pressure on inflation.
These factors require continuous monitoring and may influence future policy adjustments.
Supply-side developments present favorable conditions for inflation management in the coming fiscal year.
The report highlights easing supply chain pressures, declining global commodity prices, and expectations for enhanced agricultural production supported by above-normal southwest monsoon patterns and elevated reservoir levels.
The banking sector assessment reveals institutional resilience while emphasising the importance of proactive risk management given global uncertainties.
