The Reserve Bank of India disclosed the key details of the most recent Monetary Policy Committee meeting, shedding light on the internal discussions regarding the current policy stance. While most members of the committee showed support for maintaining the repo rate at 6.5%, there were concerns raised about the risks associated with food inflation and external factors that could disrupt the disinflationary process. The committee highlighted the significance of ensuring durable price stability as a critical foundation for fostering a period of sustained high growth in the economy.
During the meeting held on April 5, the RBI deliberated on the decision to keep the policy rate unchanged, citing apprehensions about inflation. Among the committee members, Dr. Michael Debabrata, Shashanka Bhide, Ashima Goyal, and Rajiv Ranjan backed the decision to hold the repo rate steady, while Jayanth R Varma proposed a slight reduction of 25 basis points. Dr. Patra specifically pointed out concerns about the persistently high levels of food inflation risks, noting the emergence of a price momentum as summer approaches and the potential impacts on inflation trends until Q2FY25.
The RBI Governor, Shaktikanta Das, emphasized the importance of maintaining control over inflation levels and highlighted the need to work towards achieving a 4% target on a sustainable basis. Despite positive economic growth prospects for India in 2024-25, concerns were raised about the potential impact of supply-side shocks and geopolitical tensions on the inflation outlook. The committee discussed the necessity of balancing growth objectives with inflation management, with differing viewpoints on the ideal approach to monetary policy to minimize the growth sacrifice while ensuring inflation remains within the target band.