Explained: Reasons why RBI cut its retail inflation forecast for 2019

Beyond the near term, several uncertainties cloud the inflation outlook, said RBI

The Reserve Bank of India (RBI) on Thursday cut the retail inflation forecast to 2.9-3 per cent for the first half of current fiscal, mainly due to lower food and fuel prices as well as expectation of a normal rainy season. However, the central bank voiced uncertainty over inflation outlook.

In its previous policy outcome in February, the RBI had projected retail inflation between 3.2-3.4 per cent for the first half of 2019-20.

Here are the reasons why the RBI has cut inflation forecast

First, low food inflation during January-February will have a bearing on the near-term