Job to curb price rise not over yet: MPC members
MUMBAI : Members of the central bank’s monetary policy committee (MPC) have reaffirmed their commitment to bring down inflation to the 4% target amid a sudden spike in vegetable prices, minutes of the MPC meeting released on Thursday showed. Earlier this month, MPC unanimously voted to keep repo rate unchanged at 6.5% for the third straight meeting. The members, however, did not signal the need for any rate action at this point unless food inflation gets generalized.
Still, the majority of members said their job to bring down inflation is not over yet, despite raising policy rates by 250 basis points since May 2022. Reserve Bank of India (RBI) governor Shaktikanta Das sounded cautious about the second-round impact of food-price shocks, according to the minutes. “Headline inflation has softened from last year’s elevated level, but it still rules above the target.
Our task is still not over," Das said. The governor said given the likely short-term nature of the vegetable price shocks, monetary policy could look through the first-round impact of fleeting shocks on headline inflation. “At the same time, we need to be ready to pre-empt any second-round impact of food price shocks on the broader inflationary pressures and risks to the anchoring of inflation expectations," he said.
Speaking at an event in Mumbai on Wednesday, Das said vegetable prices were showing signs of softening, and vegetable inflation was expected to decline in September. Rajiv Ranjan, executive director of RBI, also sounded cautious on the second-order impact of inflation but noted that MPC’s prognosis of looking through transitory pressures on inflation had proved correct during mid-2020 and mid-2021. “If monetary policy responds to such a surge in
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