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