RBI MPC Minutes: Job on inflation front not over, ‘last mile’ of disinflation can be sticky; 5 key highlights

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policy committee (MPC) meeting on February 8 decided to keep the benchmark interest rate (repo rate) unchanged at 6.5 per cent citing inflationary concerns. Five members including Dr. Michael Debabrata, Shashanka Bhide, Ashima Goyal, and Rajiv Ranjan voted for status quo on the policy rate for the sixth consecutive time, while Jayanth R Varma voted to reduce the policy repo rate by 25 basis points.

RBI Governor Shaktikanta Das said that the current setting of monetary policy is moving in the right direction, with growth holding firm and inflation trending down to the target. ‘’At this juncture, monetary policy must remain vigilant and not assume that our job on the inflation front is over. We must remain committed to successfully navigating the ‘last mile’ of disinflation which can be sticky,'' said Das.

As markets are front-running central banks in anticipation of policy pivots, any premature move may undermine the success achieved so far. Price and financial stability are essential to sustain a long haul of high growth. Policy imperative at the current juncture is to remain focused on achieving the four per cent inflation target on a durable basis, keeping in mind the objective of growth, explained Das.

On the inflation front, large and repetitive food price shocks are interrupting the pace of disinflation that is led by the moderation of core inflation. ‘’Food price uncertainty remains a major source of volatility for headline inflation outlook. Growing geo-political tensions and supply chain disruptions due to new flash points also pose further risks to the inflation outlook,'' said Shaktikanta Das.