Inflation in India likely to ease only gradually

Inflation in India is likely to ease only gradually, Reserve Bank of India Deputy Governor Michael Patra said on Thursday, adding that the outlook on growth and inflation will help determine the future course of monetary policy.

The Indian economy is emerging from the second wave in a more resilient manner as compared with the first, Patra said, adding that recovery was more broad-based around manufacturing as a pivot, though output is still below pre-pandemic levels.

He said the need to revive and sustain growth on a durable basis while keeping inflation in check warrants monetary policy accommodation,

and that is mirrored in the high systemic liquidity and easy financial conditions.

“We don’t like tantrums. We like tepid and transparent transitions – glide paths rather than crash landings,” Patra said at an event organised by the Confederation of Indian Industry.

He said the analysis of inflation dynamics indicates that the easing of headline inflation from current levels is likely to be “grudging and uneven”.