Inflation as Banquo’s ghost: It’s back to haunt RBI’s policy panel

livemint.com:

RBI) MPC was an exception to the rule. It was a relatively open-and-shut case, with markets unanimous that the MPC would opt for the status quo. Even so, there was just that soupçon of uncertainty up to the moment of Governor Shaktikanta Das’s statement on Thursday morning, confirming that yes, markets had called it right: The policy—or repo—rate, at which RBI infuses liquidity into the system, has been kept unchanged at 6.5% for the third successive time.

So has the stance, ‘focused on withdrawal of accommodation.’ The decision, at the third of the six MPC meetings scheduled for 2023-24, is of a piece with decisions taken earlier. Rewind to the first MPC meet of this fiscal year and the Governor’s statement in April 2023. “The Monetary Policy Committee decided unanimously to keep the policy repo rate unchanged at 6.50%… with readiness to act, should the situation so warrant… The MPC also decided …to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.

Let me emphasize that the decision to pause on the repo rate is for this meeting only" (emphasis added). Fast forward to the Governor’s statement after the next meeting in June 2023. “The MPC decided unanimously to keep the policy repo rate unchanged at 6.50%….

The MPC also decided… to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth." Spot the differences, other than the dates. First, while the April statement spoke of a “readiness to act, should the situation so warrant," the June statement was silent on this. One could argue the affirmation is superfluous, since it is the job of central banks “to act, should