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The Reserve Bank of India (RBI) recently unveiled the minutes of the Monetary Policy Committee (MPC) meeting held from February 6 to 8, shedding light on the decision to maintain policy rates at 6.5 per cent.
RBI Governor Shaktikanta Das elucidated the rationale behind the decision during the meeting. He emphasized the importance of remaining vigilant on the inflation front despite growth holding steady and inflation trending downwards towards the target.
Das underscored the necessity of successfully navigating the ‘last mile’ of disinflation, cautioning against premature policy pivots that could potentially undermine progress. He stressed the significance of price and financial stability in sustaining long-term growth.
In line with these considerations, Das advocated for maintaining the policy repo rate unchanged and continuing to focus on withdrawing accommodation to achieve the 4 per cent inflation target on a durable basis while supporting growth objectives.
Regarding GDP growth, Das highlighted the real GDP’s trajectory for the fiscal year, building on a growth rate of 7.2 per cent recorded in the preceding fiscal year. Additionally, he mentioned that inflation is expected to soften to 5.4 per cent in 2023-24 from 6.7 per cent in the previous year, indicating a positive trend.
Despite rising consumer confidence and upbeat business sentiments, Das noted the importance of anchoring inflation expectations while acknowledging the decisive decline in Consumer Price Index (CPI) inflation from elevated levels observed last summer.
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