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Reserve Bank of India (RBI) Deputy Governor Michael Debabrata Patra has said that in the near-term, inflation trajectory continues to be ‘heavily contingent’ upon the evolving geopolitical developments, international commodity prices and global financial sector developments. He said the RBI on its part has front-loaded monetary policy response, with a cumulative 140 basis points increase in the benchmark rate so far with an aim to check high inflation which is ruling above its comfort zone of 6 per cent for the past seven months.

Patra said ‘although inflation appears to be moderating from its peak of 7.8 per cent in April this year, we would prefer to await more incoming data before we are convinced that this a durable trend’. He said while some easing of international commodity prices and supply chain pressures, both globally and domestically, are positive developments, upside risks remain in the form of potential second order effects and the transmission of input cost pressures to the sticky core component of inflation.

RBI Deputy Governor stated that for the financial year 2022-23 (April-March) as a whole, the RBI has projected that headline CPI inflation would average 6.7 per cent. He further said the RBI has taken several initiatives to strengthen inflation monitoring and improve the accuracy of forecasting. Besides widening the ambit and depth of a suite of forward-looking surveys, a data science lab has been set up to explore alternative forecasting techniques and models, including artificial intelligence and machine learning (AI/ML). He also informed that the RBI has stepped up the gathering of market-based intelligence from trade bodies, traders, domain experts and regional units.