Reserve Bank of India (RBI) Governor Shaktikanta Das emphasized the importance of keeping inflation under control, comparing it to a horse that needs to be held on a tight leash. Speaking after the RBI's December monetary policy meeting, he reaffirmed the bank's commitment to maintaining price stability amid ongoing inflationary pressures. The RBI decided to keep the repo rate unchanged at 6.5% for the 11th consecutive time, demonstrating a cautious approach in managing inflation while also supporting economic growth.
Read More: RBI Keeps Repo Rate Unchanged at 6.5% Amid Inflation and Growth Challenges
"The inflation horse made a very valiant effort to bolt, but our effort is to keep it on a tight leash," Das said.
The RBI also updated its inflation forecast for the financial year 2025 to 4.8%, slightly higher than the earlier estimate of 4.5%. Das acknowledged that controlling inflation remains challenging due to factors like fluctuating food prices, geopolitical tensions, and disruptions in supply chains.
Read More: RBI's Monetary Policy Update: What to Expect from Governor Shaktikanta Das' Live Address
"The last mile of disinflation is proving to be prolonged and arduous," Das said, highlighting the need for continuous vigilance. The inflation adjustment comes primarily from rising food prices, including pulses and edible oils. However, Das expressed hope for some relief, expecting a seasonal drop in vegetable prices in the winter and improvements from the upcoming Rabi harvest.
"Our policy stance remains focused on ensuring a durable alignment of inflation with our target of 4%, while also supporting growth," Das said. The RBI has maintained a neutral stance, leaving room for future rate cuts if inflation stabilizes.
Read More: RBI MPC Meet: Growth Needs Support, But Inflation May Delay Rate Cut
This latest update on inflation follows Das' previous remarks in October, where he compared inflation to an elephant that the RBI must prevent from hindering economic recovery. "With a lot of effort, the horse has been brought into the stable. We have to be very careful before opening the gate of the stable because there is every chance that the inflation horse will simply bolt again," Das had said at that time.
Read More: Ahead Of RBI MPC Meet, THESE Banks Revise FD Interest Rates