India central bank chief expects inflation to ease to 5 per cent by spring

Indian rupeeReuters

India's inflation has peaked and is expected to moderate to around 5 per cent by the April-June quarter of next year, Reserve Bank of India (RBI) governor Shaktikanta Das said in an interview on Friday.

Inflation has remained above RBI's 2 to 6 per cent tolerance band for several months, with consumer inflation at 6.71 per cent in July.

The governor also said that the policy aim is to control inflation while minimising any impact on economic growth.

The RBI's monetary policy committee raised the bank's key lending rate by 50 basis points last month, its third increase in four months to curb rising prices, and economists polled by Reuters expect further tightening into early 2023. The next monetary policy meeting is on 30 September.

The central bank has also been intervening to support the volatile rupee, which is hovering around the 78.80 to a dollar mark.

Strong forex reserves have helped to maintain rupee stability, Das added.

The RBI's foreign exchange reserves totalled US$564.05 billion as of 19 August. They have dropped by nearly US$70 billion in 2022 as the central bank stepped in to tame price swings and lift the rupee from record lows.