RBI's Inflation Battle: A Path to Economic Stability

The Reserve Bank of India claims victory in its battle against inflation, though the war is not over yet, as price stability continues to be the primary objective, according to Governor Sanjay Malhotra at a Financial Express event.

Retail inflation has plummeted to a six-year low, prompting suggestions for another rate cut this year. However, analysts warn this disinflation signals a demand slump in the economy. Monetary policy, focused on future growth and inflation rather than current levels, will be discussed in an upcoming meeting.

Governor Malhotra emphasized that the new "neutral" stance allows flexibility in monetary policy, although the threshold for further easing is higher. Swift policy transmission through previous rate cuts is aiding economic growth, with the central bank prepared to implement additional measures if required.

(With inputs from agencies.)