Inflation set to ease, though stubbornly: RBI bulletin

New Delhi: The Reserve Bank of India (RBI) has expressed optimism that headline inflation is set to ease from its September high, albeit stubbornly, on the back of easing momentum and favourable base effects.

These observations have been made in the central bank’s monthly bulletin for the month of October.

In the article on the state of economy published in the bulletin, the central bank said that “these factors will entrench India’s prospects as one of the fastest growing economies of the world”.

Commenting on the global scenario, it noted that “aggressive and synchronised monetary tightening has further weakened global economic prospects as financial markets sold off, investors took fright and jettisoned risky assets”.

In contrast to the prevailing global situation, the RBI bulletin however noted that in India, broader economic activity has remained resilient and poised to expand further with domestic demand accelerating as the contact-intensive sectors are experiencing a bounce-back.

“Robust credit growth and fortified corporate and bank balance sheets provide further strength to the economy. Headline inflation is set to ease from its September high, albeit stubbornly, on the back of easing momentum and favourable base effects. These factors will entrench India’s prospects as one of the fastest growing economies of the world,” it said.