Reserve Bank Governor Shaktikanta Das said that if crude prices fall significantly, inflation will come down too.
Das while speaking at a press conference in Mumbai after a meeting of the RBI’s central board of directors said the inflation forecast of the central bank for the next financial year is conservative and has several factors into consideration.
On price rise, the RBI governor said retail inflation is expected to be around 5.3 percent in 2023-24 and may come down further if crude prices remain benign.
Das said the Reserve Bank has assumed $95 per barrel rate of crude for inflation projection for the next fiscal. The RBI chief, however, added that commodity prices may go up due to opening up of economies.
“So if the oil prices go down significantly and if there is an advantage of other commodity prices, it will work to our favour in terms of leading to lower inflation.”
Inflation in the next fiscal year is expected to be 5.3 percent, with Q1 at 5 percent, Q2 at 5.4 percent, Q3 at 5.4 percent and Q4 at 5.6 percent. Das had earlier said that inflation would ease to 5 percent by April to June of next year.
Talking about interest rates, Das said India had negative interest rates for the last three years.
Das said RBI has assumed $95 per barrel rate of crude for inflation projection for the next fiscal.
On interest rates on loans, he said it all depends on market competition as it will decide rates on loans and deposits both as it has been a de-regulated segment.
On future rates, he said if interest rates go up, deposit rates will also rise.
