RBI Committed To Bring Down Inflation To 4 Per Cent: Governor Shaktikanta Das

Das said the central bank remains on guard to ensure that the second-order effects in the form of generalisation and persistence with regard to inflation are not allowed to take hold

Reserve Bank of India (RBI) Governor Shaktikanta Das on Tuesday said the central bank is committed to bringing down inflation to 4 per cent and will remain watchful of risks as more frequent global supply shocks can have profound implications on the management of the price situation, the PTI reported.

Das, who was delivering a lecture at the Delhi School of Economics, said the central bank remains on guard to ensure that the second-order effects in the form of generalisation and persistence with regard to inflation are not allowed to take hold. The RBI has been mandated by the government to keep inflation at 4 per cent with a margin of 2 per cent on either side.

The governor said, "The frequent incidences of recurring food price shocks pose a risk to the anchoring of inflation expectations, which has been underway since February 2022. We will remain watchful of this aspect also. The role of continued and timely supply side interventions as is being undertaken by the government assumes criticality in limiting the severity and duration of such food price shocks."

In these circumstances, he said, it is necessary to be watchful of any risk to price stability and act timely and appropriately. "We remained firmly focused on aligning inflation to the target of 4 per cent," he said without giving any timeframe. He also said that inflation, which had touched a high of 7.4 per cent in July, driven by a rise in vegetable prices, has started moderating. 

Meanwhile, the RBI on Tuesday said the regulator is planning to extend wholesale Central Bank Digital Currency (CBDC) as token for interbank borrowing or call money market. The pilot in wholesale segment, known as the Digital Rupee -Wholesale (e₹-W), was launched on November 1, 2022, with use case being limited to the settlement of secondary market transactions in government securities.

"RBI is now planning to go into interbank borrowing market. The purpose of wholesale CBDC has been to try out different technologies...experimenting on technology is relatively easier for wholesale pilot because participants are related," RBI sources said. The introduction of CBDC was announced in the Union Budget 2022-23, by Finance Minister Nirmala Sitharaman and necessary amendments to the relevant section of the RBI Act, 1934 was made with the passage of the Finance Bill 2022.