Inflation horse needs a tight leash: RBI Guv Shaktikanta Das

Continuing his analogy of the inflation horse and Reserve Bank of India’s (RBI) persistent battle with it, Governor Shaktikanta Das on Friday said that it needs to be kept on a tight leash.

Speaking after the RBI's December monetary policy meeting, Das reaffirmed the central bank's unwavering commitment to price stability amidst ongoing inflationary pressures. The RBI left the repo rate unchanged at 6.5% for the 11th consecutive time, highlighting its cautious approach to balancing inflation control with economic growth.

"The inflation horse made a very valiant effort to bolt, but our effort is to keep it on a tight leash," Das said.


The RBI revised its inflation forecast for FY25 to 4.8%, up from the previous estimate of 4.5%.

Das acknowledged the challenges in taming inflation, driven by volatile food prices, global geopolitical tensions, and supply-side disruptions.

"The last mile of disinflation is proving to be prolonged and arduous," he had said in his statement while announcing the policy decision, further stressing on the need for sustained vigilance.

The upward revision in inflation is a testament to persistent food price pressures, including elevated prices of pulses and edible oils. However, Das expressed optimism about a seasonal decline in vegetable prices during winter and relief from the upcoming Rabi harvest.

"Our policy stance remains focused on ensuring a durable alignment of inflation with our target of 4%, while also supporting growth," Das said in the statement. The RBI has kept its stance neutral, leaving room for rate cuts if inflation stabilizes.

Das’ analogy of the horse had succeeded the 'elephant in the room' (inflation) in the October meeting, reiterating the central bank’s goal to prevent inflation from derailing economic recovery.

"With a lot of effort, the horse has been brought into the stable. We have to be very careful before opening the gate of the stable because there is every chance that the (inflation) horse will simply bolt again. We have to hold it in tight leash and have greater confidence and alignment of the inflation with the target," Das had said during the October monetary policy press conference.