ENHANCED SURVEILLANCE BY RBI ON FOOD INFLATION

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RBI Governor Shaktikanta Das Addresses Economic Outlook, Inflation, and Fintech Collaboration with Japan

In a recent speech delivered in Tokyo, Reserve Bank of India (RBI) governor Shaktikanta Das highlighted the ongoing challenges to retail inflation, emphasizing the need for vigilant monetary policy. Das expressed concerns about the susceptibility of retail inflation to recurring and overlapping food price shocks, necessitating a proactive approach to align inflation with the target while supporting economic growth.

As of September, India’s retail inflation had eased to a three-month low of 5.02%, primarily attributed to softer vegetable prices. However, it remained above the RBI’s target of 4%. The upcoming retail inflation data for October, scheduled for release on November 13, will provide further insights into the inflationary trends.

Das acknowledged the recent geopolitical developments in West Asia, characterizing them as additional challenges for the global economy. To address potential eventualities, he stated that the RBI has bolstered foreign exchange reserves. Despite these challenges, Das expressed satisfaction with the resilience of the Indian economy, citing its smooth navigation through turbulent waters in recent years.

Providing an overview of India’s economic performance, Das emphasized that growth remains on track, the current account deficit is manageable, and the balance sheets of banks and corporates are healthy. He attributed this positive trajectory to the country’s inherent dynamism and a prudent policy mix. Additionally, he praised the calibrated, focused, and targeted monetary and fiscal responses implemented since the pandemic, which have played a crucial role in sustaining economic stability.

While acknowledging the success and strength of India’s economic fundamentals, Das cautioned against complacency in the face of the current uncertain environment. He highlighted the importance of remaining agile and fortifying macroeconomic fundamentals and buffers. Despite challenges, Das expressed confidence in India’s prospects, noting that confidence and trust in the country’s economic outlook are at an all-time high.

Addressing potential collaborations, Das proposed exploring the linkage of India and Japan’s fast payment systems to enhance cross-border payment efficiency and reduce costs. He lauded the role of the Unified Payments Interface (UPI) in India’s fintech revolution and mentioned ongoing efforts to link UPI with fast payment systems of other countries. The possibility of linking India and Japan’s fast payment systems was presented as a means to leverage fintech capabilities for more efficient cross-border transactions.

In conclusion, Governor Shaktikanta Das’s speech highlighted the RBI’s commitment to addressing inflationary challenges, ensuring economic stability, and exploring opportunities for international fintech collaboration. The comprehensive overview of India’s economic performance, combined with cautious optimism and a proactive stance, underscores the central bank’s dedication to maintaining a robust and resilient economy in the face of global uncertainties.

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