Question
As per recent economic survey, what role did the RBI's
monetary policy play in controlling core inflation in FY24?Solution
The RBI's monetary policy played a crucial role in controlling core inflation in FY24. The central bank increased the policy repo rate by 250 basis points between May 2022 and February 2023, which helped reduce inflationary pressures by absorbing excess liquidity in the economy. As a result, core inflation, which excludes volatile food and energy prices, declined to a four-year low by the end of FY24, demonstrating the effectiveness of the monetary policy transmission in curbing inflation.
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