The Monetary Policy Committee (MPC) of the Reserve Bank of India did not change the two most important monetary policy tools. At its April meeting, The policy rate remains unchanged at 4%, and the monetary policy stance continues to be accommodative but made it clear that monetary policy focus, in the future, will start pivoting towards controlling inflation rather than throwing the kitchen sink at the Indian economy’s growth problem.
According to the Consumer Price Index (CPI), benchmark inflation will peak at 5.7% in 2022-23, up dramatically from 4.5% forecast in February. Inflation and growth forecasts given in the MPC resolution published on April 8 underline the need for a recalibration in the policy. Benchmark inflation in 2022-23 will increase by 5.7%, a sharp increase from the 4.5% forecast in February (before the Russian invasion of Ukraine). GDP growth for 2022-23 is expected to be 7.2%, a downward revision from the 7.8% projection in the February meeting. MPC expects the average price of India’s crude oil basket to be $100 per barrel in 2022-23.