RBI's monetary policy committee refuses to drop its guard on inflation

Most members of the Reserve Bank of India s monetary policy committee (MPC) decided to stick to the course on bringing retail inflation to the target of 4 per cent while voting for maintaining status quo in the April review, except external member Jayanth Varma who voted for a 25 bps cut in the repo rate.

I believe that the extant monetary policy setting is well positioned, RBI governor Shaktikanta Das said in the minutes of the policy review, which came out on Friday.

Monetary policy transmission is continuing and inflation expectations of households are also getting further anchored. At this stage, we should stay the course and remain vigilant. The gains in disinflation achieved over last two years have to be preserved and taken forward towards aligning the headline inflation to the 4 per cent target on a durable basis, Das said while adding strong growth momentum provides the policy space to unwaveringly focus on price stability.

External member Shashanka Bhide also pointed that due to strong economic growth, it is necessary to maintain monetary policy focus on aligning the inflation trends with the target.

 Deputy governor Michael Patra said headline inflation is expected to remain in the upper reaches of the tolerance band until favourable base effects come into play in the second quarter of 2024-25.

Hence, conditions are not yet in place for any let-up in the restrictive stance of monetary policy. Downward pressure on inflation must be maintained until a better balance of risks becomes evident and the layers of uncertainty clouding the near-term clear away, he said.
 

www.business-standard.com dt. 20.04.2024