RBI Governor: Headline Inflation to Guide Monetary Policy

RBI Governor Sanjay Malhotra on Wednesday reiterated that headline inflation will continue to remain the Reserve Bank of India's primary guide for monetary policy decisions, reaffirming the central bank's commitment to achieving its inflation target over the medium term.

Speaking on the RBI's inflation management approach, Malhotra said the central bank closely monitors core inflation to understand underlying price pressures and assess where headline inflation is likely to converge in the future.

He noted that headline inflation often experiences significant volatility due to fluctuations in food and fuel prices as well as external shocks. Because of this, the RBI does not seek to mirror such short-term volatility in its policy repo rate decisions.

"The headline inflation, which is the target given to us, will continue to guide us. It is our commitment and endeavour to bring headline inflation in line with the target over the medium term," the RBI Governor said.

Malhotra added that while core inflation provides valuable insights into underlying inflationary trends, the central bank remains focused on ensuring stable prices without allowing temporary shocks to dictate monetary policy actions.