Knee-jerk monetary policy move won’t tame inflation: Das

NEW DELHI: The Reserve Bank of India’s (RBI’s) job to bring down inflation is not over, and any premature move on the policy front could undermine the success achieved so far on the price situation, according to RBI Governor Shaktikanta Das.

RBI’s rate setting panel, Monetary Policy Committee (MPC), had met for three days from February 6-8. The panel decided to leave the key policy rate unchanged at 6.5 per cent for the sixth time in row. It is almost a year now that the repo rate or short-term borrowing rate is at 6.5 per cent. In February last year, RBI hiked repo rate and held the policy rate since then.

According to the minutes of the February Monetary Policy Committee (MPC) meeting released by the central bank on Thursday, Das had said at this juncture, monetary policy must remain vigilant and “not assume that our job on the inflation front is over.” He stressed that the MPC must remain committed to successfully navigate the “last mile” of disinflation that can be sticky. Das made the remarks while voting for status quo in the key interest rate earlier this month.

“As markets are front-running central banks in anticipation of policy pivots, any premature move may undermine the success achieved so far,” the governor said, as per the minutes.

He argued that price and financial stability were essential to sustain a long haul of high growth, and the monetary policy’s objective was to stay focused on achieving the 4 per cent inflation target on a durable basis, keeping in mind the objective of growth.

Five of the six MPC members had voted to keep the short-term benchmark lending rate at 6.5 per cent.

The rate-setting panel consists of three external and three RBI officials as members.