RBI's Inflation Forecasting: No Bias, Just Global Phenomenon, Says Deputy Governor

RBI Deputy Governor Poonam Gupta clarified that there is no 'systematic bias' in the central bank's inflation forecasting. Utilizing diverse models and expert consultations, the RBI acknowledges global challenges in forecasting. It aims to improve data dissemination by planning monthly updates on balance of payments amid global trade shifts.

RBI Deputy Governor Poonam Gupta asserted there is no systemic bias in the central bank's inflation forecasting methods. Her statement attempts to quell concerns over recent criticisms suggesting overestimation of inflation figures has hindered rate cuts.

Gupta explained that the Reserve Bank of India employs a diverse set of models, historical data, and expert consultations from multiple stakeholders to derive its inflation predictions. This multidimensional approach aims to minimize errors, which Gupta noted is a 'global phenomenon' not unique to India.

Beyond inflation forecasting, the RBI plans monthly updates on the balance of payments, enhancing data release frequency from quarterly. Gupta noted this change is part of an effort to provide better insights into the country's external financial position amidst dynamic global trade policies.