Keeping in view the global trend in commodity prices and demand supply balance, RBI''s projected WPI inflation to be around 4% by the end of March 2010. Moreover, it expects the WPI inflation to be in the negative territory in the early part of 2009-10.
However, the policy review of RBI 2009-10 stated that this expected negative inflation in India has only statistical significance and is not a reflection of demand contraction as is the case in advanced economies. This transitory WPI inflation in negative zone may not persist beyond the middle of 2009-10. The consumer price inflation as reflected in various indices is expected to moderate from its present high level but would continue to remain in positive territory through 2009-10 unlike WPI inflation.
India Meteorological Department in its forecast of South-West monsoon expects a normal rainfall at 96 per cent of its long period average for the current year.
Moreover the policy review added that it would be the endeavour of the Reserve Bank to ensure price stability and anchor inflation expectations. Towards this objective, the Reserve Bank will, as always, continue to take into account the behaviour of all the price indices and their components. The conduct of monetary policy would continue to condition and contain perception of inflation in the range of 4.0-4.5 per cent so that an inflation rate of around 3.0 per cent becomes the medium-term objective.
However, the policy review of RBI 2009-10 stated that this expected negative inflation in India has only statistical significance and is not a reflection of demand contraction as is the case in advanced economies. This transitory WPI inflation in negative zone may not persist beyond the middle of 2009-10. The consumer price inflation as reflected in various indices is expected to moderate from its present high level but would continue to remain in positive territory through 2009-10 unlike WPI inflation.
India Meteorological Department in its forecast of South-West monsoon expects a normal rainfall at 96 per cent of its long period average for the current year.
Moreover the policy review added that it would be the endeavour of the Reserve Bank to ensure price stability and anchor inflation expectations. Towards this objective, the Reserve Bank will, as always, continue to take into account the behaviour of all the price indices and their components. The conduct of monetary policy would continue to condition and contain perception of inflation in the range of 4.0-4.5 per cent so that an inflation rate of around 3.0 per cent becomes the medium-term objective.
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