RBI revises inflation forecast upward to 6.5% in Q3 of FY20

In its sixth bi-monthly monetary policy, the Reserve Bank of India (RBI) on Thursday revised the retail inflation forecast upward to 6.5 percent for January-March quarter of the current fiscal.

The inflation level is projected to be 5.4-5.0 percent for the first half of FY21 and 3.2 percent for Q3 of FY21 with risks broadly balanced.

The projected inflation is beyond the RBI’s comfort level of 4 percent with a margin of 2 percent on either side thus reducing the scope of reduction in the key policy rate in the short run.

The Monetary Policy Committee (MPC) observed that food inflation is likely to soften from the high levels of December and the decline is expected to become more pronounced during the last quarter of FY20 as onion prices fall rapidly in response to arrivals of late Kharif and rabi harvests.

Read More: https://www.bhaskarlive.in/rbi-revises-inflation-forecast-upward-to-6-5-in-q3-of-fy20/