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Banks (Finance)

Retail Inflation Hits 15-Month High as RBI Chief Emphasizes Need for Policy Response

Strategic Insights

— 1 min read

Reserve Bank of India (RBI) Governor Shaktikanta Das has expressed concern over the rising retail inflation rate, which has shot up to a 15-month high of 7.44 per cent in July. Das emphasized the need for policy response if supply shocks persist and spread, highlighting the importance of containing the second-round effects of such shocks on the economy. The RBI chief reiterated the role of continued and timely supply-side interventions by the government in restricting the severity and duration of food price shocks.

Key Takeaways:

  • Retail inflation has reached a 15-month high of 7.44 per cent in July, driven by rising food prices.
  • RBI Governor Shaktikanta Das has stated that the central bank is "firmly focused" on bringing down inflation to the targeted 4 per cent and will take policy response if supply shocks persist and spread.
  • Das emphasized the importance of containing the second-round effects of supply shocks on the economy, highlighting the need for continued and timely supply-side interventions by the government.
  • The RBI is extending the trials of the wholesale central bank digital currency (CBDC) or the e-rupee to the inter-bank call money market from the government securities market.
  • The introduction of CBDC in the call money market is unlikely to lead to significant disruption, as the volumes in the secondary market of government securities have declined.
  • RBI Governor Shaktikanta Das's statement on the need for policy response to rising inflation and supply shocks.
  • The RBI's extension of CBDC trials to the inter-bank call money market.
  • Data showing a decline in traded volumes using CBDC in the secondary market of government securities.

Statistics:

  • Retail inflation rate reaches 15-month high of 7.44 per cent in July (Source: Reserve Bank of India).
  • Daily turnover in the call market is Rs 11,644 crore (Source: Clearing Corporation of India Limited).
  • Traded volume using CBDC in the government securities market stood at Rs 275 crore on the day of the pilot launch (Source: Reserve Bank of India).
  • Daily turnover in the tri-party repo market is Rs 3.60 lakh crore (Source: Clearing Corporation of India Limited).

Sources:

  • Reserve Bank of India (no date mentioned).
  • Clearing Corporation of India Limited (no date mentioned).
  • Speech of RBI Governor Shaktikanta Das, "The Art of Monetary Policy Making: The Indian Context" at the Delhi School of Economics (no date mentioned).

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