Retail inflation is expected to be around 5.3 per cent in 2023-24 and may fall further if crude prices remain benign, RBI governor Shaktikanta Das said here on Saturday.

The RBI has assumed a $95 per barrel rate of crude for inflation projection for the next fiscal, he told reporters after finance minister Nirmala Sitharaman addressed the RBI board.

“So if the oil prices go down significantly and if there is an advantage of other commodity prices, it will work to (our) favour in terms of leading to lower inflation but if demand for oil due to the opening of countries (rises)... then the commodity prices may go up,” he said.

“I would like to add that the global economic outlook does not look as grim as it did about six months ago. The talk of a deep recession in many countries, including advanced nations... is behind us. Now the talk around the world is either the softer recession or just a global slowdown. So, therefore, the risks are evenly balanced. We have to wait and see how it plays out.”

On the pricing of loans, Das said market competition will decide rates on lending and deposit sides as it has been a de-regulated segment. The real interest rates have just moved into the positive territory, he said, adding the economy faced negative interest rates for the last three years.

“The continuation of negative interest rates for too long can create instability in the financial system,” he said.