Mumbai, April 8 : The Reserve Bank of India (RBI) on Friday revised its inflation projection to 5.7 per cent for the current financial year 2022-23, amid heightened geopolitical tensions and rise in oil and commodity prices. Announcing the first bi-monthly policy for FY2023, RBI Governor Shaktikanta Das said that heightened geopolitical tensions since February have upended the earlier narrative and considerably clouded the inflation outlook for the year. He noted that the spike in international crude oil prices since February-end poses substantial upside risk to inflation through both direct and indirect effects. Das observed that amid the prevailing conditions, the financial markets are likely to remain volatile on rising risk premia, dislocations in trade and capital flows and divergent monetary policy responses across central banks. “Taking into account these factors and on the assumption of a normal monsoon in 2022 and average crude oil price (Indian basket) of USD 100 per barrel, inflation is now projected at 5.7 per cent in 2022-23, with Q1 at 6.3 per cent; Q2 at 5.8 per cent; Q3 at 5.4 per cent; and Q4 at 5.1 per cent,” Das said. The apex bank had, in its last policy meeting, indicated retail inflation to be at 4.5 per cent for FY2023. Continuing with its accommodative stance, the RBI has kept the benchmark lending rate unchanged at 4 per cent, for the 11th time in a row. “Given the excessive volatility in global crude oil prices since late February and the extreme uncertainty over the evolving geopolitical tensions, any projection of growth and inflation is fraught with risk, and is largely contingent upon future oil and commodity price developments,” he noted. PSK
