From Plodding Elephant to Agile Horse - A Signal of Potential Inflationary Surge?

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From Plodding Elephant to Agile Horse - A Signal of Potential Inflationary Surge?

From Elephant to Horse - A Closer Look

The Reserve Bank of India (RBI) Governor, Shaktikanta Das, has shifted his metaphor for inflation from a slow-moving elephant to a more agile horse. This change suggests a potential concern that inflation could pick up pace in the coming months.

Several factors could contribute to this scenario. Firstly, the recent interest rate cut by the US Federal Reserve could weaken the dollar, leading to higher commodity prices. Secondly, Chinese stimulus measures could increase demand for commodities, further pushing up prices. Finally, tensions in West Asia are already straining supply chains and driving up commodity prices.

The RBI Governor has acknowledged these risks, highlighting unexpected weather events and escalating geopolitical conflicts as significant factors. While the inflation projection for 2024-25 remains at 4.5%, the RBI will need to keep a close eye on the inflation horse to ensure it doesn't bolt.