The Reserve Bank has lowered the retail inflation projection for the current quarter of this fiscal at 5.2 per cent, saying it has returned within the "tolerance band".
On the economy, the central bank said it is only going to look upwards from here.
In its last monetary policy review of this fiscal, the RBI has decided to keep the key repo rate unchanged at 4 per cent with accommodative stance to ensure that inflation remains within the target, RBI Governor Shaktikanta Das said while unveiling the policy on Friday.
Das also said the retail inflation has "returned within the tolerance band" of 4 per cent.
The Reserve Bank has the mandate to keep retail inflation at 4 per cent with a bias of plus/minus 2 per cent on either side.
The inflation (retail) projection is revised to 5.2 per cent for Q4 of the current fiscal, Das said, adding vegetable prices are likely to remain soft in near term on the back of fresh arrivals in the market.
In its previous policy decision in December, the RBI had projected retail inflation to be at 5.8 per cent for Q4 FY'21.
For the first half of the next fiscal year, the Reserve Bank has projected inflation to be in a band of 5.2-5 per cent.
And for the third quarter of 2021-22 (October-December), Das said: "We are projecting it (inflation) at 4.3 per cent. We are assessing the risks to be balanced".