The Reserve Bank today lowered retail inflation target for the first half of current fiscal to 4.7-5.1 per cent on sharp moderation in food price rise and the likelihood of a normal monsoon. Its bi-monthly policy review in February, RBI had projected inflation in the 5.1-5.6 per cent range in the first half of 2018-19. In its first policy review for the current fiscal, RBI has kept the key repo rate -- at which it lends to banks --unchanged at 6 per cent.
The decision of the Monetary Policy Committee (MPC) is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth, RBI said. Besides, it has also lowered the inflation outlook for last quarter of previous fiscal, ending on March 31, to 4.5 per cent from 5.1 per cent it has projected in February policy review.
For the second half 2018-19, the inflation outlook is projected at 4.4 per cent, down from previous projection of 4.5-4.6 per cent. "Actual inflation outcomes in January-February averaged 4.8 per cent, largely reflecting the sharp decline in vegetable prices and significant moderation in fuel group inflation. The available information suggests that vegetable prices continued to moderate in March as well," RBI said.
Several factors are likely to i...