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The Reserve Bank of India (RBI) has reduced the retail inflation projection for the ongoing financial year to 5.3 per cent from the previous estimate of 5.7 per cent.

In a virtual address post the monetary policy meet, RBI Governor Shaktikanta Das said on Friday that consumer price inflation softened during July-August, moving back into the tolerance band with an easing of food inflation.

This is corroborating the Monetary Policy Committee's (MPC) assessment of the spike in inflation in May as transitory, he said:

During the second quarter of FY22, inflation is seen at 5.1 per cent, and in Q3 it is likely to stand at 4.5 per cent and in Q4 at a high of 5.8 per cent.

The projection on inflation for Q1 of next fiscal (FY23) is 5.2 per cent.

In a bid to continue with its growth supporting stance, the RBI has retained its key short-term lending rates during the fourth monetary policy review of FY22.

Besides, the growth-oriented accommodative stance was retained to give a push to economic activity despite high retail inflation levels.

The MPC of the central bank voted to maintain the repo rate, or short-term lending rate, for commercial banks, at 4 per cent.

Likewise, the reverse repo rate was kept unchanged at 3.35 per cent, and the marginal standing facility (MSF) rate and the 'Bank Rate' at 4.25 per cent.

It was widely expected that the MPC would hold rates and the accommodative stance.