RBI’s monetary policy minutes show inflation primary concern

RBI’s monetary policy committee cited upside risks to inflation arising from price pressure excluding food and fuel as the main reason for keeping its policy rate unchanged


The monetary policy committee maintained its hawkish stance on inflation, with most members expressing concern over upside risks to core inflation. Photo: Mint
The monetary policy committee maintained its hawkish stance on inflation, with most members expressing concern over upside risks to core inflation. Photo: Mint

Mumbai: The Reserve Bank of India (RBI)’s monetary policy committee cited upside risks to inflation arising from price pressure excluding food and fuel as the main reason for keeping its policy rate unchanged, according to minutes of the April meeting released on Thursday.

The 6-member monetary policy committee (MPC) which had unanimously decided to keep the repo rate unchanged at 6.25% in early April, had raised a secondary rate called the reverse repo rate, which is used to drain excess funds from banks.

The MPC, which aims to bring down inflation to 4% in the medium term, maintained its hawkish stance on inflation, with most members expressing concern over upside risks to core inflation.

One member, M. D. Patra, the executive director of the RBI, and in charge of monetary policy, favoured an increase in the repo rate by 25 basis points as a pre-emptive move to curb inflation pressures.

But Patra finally agreed with the rest of the panel on holding the rate unchanged for now. Reuters

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