Why hasn't RBI shifted its policy stance to neutral yet?

livemint.com:

Even as the US central bank seems set to pivot to monetary easing soon, the Reserve Bank of India (RBI) appears in no hurry to do likewise. Its Monetary Policy Committee’s (MPC) decision on Thursday showed no sign of softening its inflation focus. Not only did it leave the central bank’s repo rate—through which it modulates short-term lending to regular banks—unchanged for the ninth successive time at 6.5%, it hasn’t budged on its long-held “withdrawal of accommodation" stance.

The anxiety revealed stems from high food inflation, which puts its headline inflation outlook at risk. According to official data, the rate of food inflation climbed to 8.4% from a year earlier in June, compared with 7.9% in May, mainly due to a sharp increase in the prices of vegetables and edible oils, and it has now averaged 8% since November. With nearly half of India’s retail inflation basket made up of food items, this meant that the overall consumer-price reading took a U-turn.

Its year-on-year incline was 5.1% in June after averaging 4.8% over the previous two months. So far, so clear. “The MPC may look through high food inflation if it is transitory; but in an environment of persisting high food inflation, as we are experiencing now, the MPC cannot afford to do so," Governor Shaktikanta Das said.

Various factors suggest that food-price pressures might be here to stay. Were RBI to ignore these and seek price stability without taking food and fuel into account (core inflation is just above 3%), it would risk spillovers and second-round effects, only to achieve a Pyrrhic victory against our rising cost of living, a battle it has waged since 2022. Therefore, RBI is likely to stay hawkish until retail inflation is durably squashed to its 4%