Inflation control is still a work in progress, according to Governor Shaktikanta Das in the minutes of the RBI MPC

As the Reserve Bank Governor and the other five members of the rate-setting panel voted early this month to maintain the status quo in the key policy rates, Shaktikanta Das expressed the opinion that “our job is only half done, having brought inflation within the target band.”

The short-term loan rate (repo), which had been steadily rising since May 2022, was maintained by the Monetary Policy Committee (MPC) at the direction of the Governor for the second consecutive time.

According to the minutes of the MPC meeting, which took place from June 6 to 8, Das said that India’s macroeconomic fundamentals are improving and that its growth possibilities are gradually becoming more widespread.

He said that the external sector outlook has improved and that inflation has subsided. Bank and corporate balance sheets are robust and healthy, creating a dual balance sheet advantage for growth.

“Despite having brought inflation inside the goal range, our work is just halfway done. The battle against inflation is still ongoing. We must evaluate how the inflation-growth picture is changing in the future and be prepared to take action if necessary.

According to the minutes, he said, “Beyond this, and given the current uncertainty, it is difficult to offer any firm forward guidance on our future course of action in a rate tightening cycle.

The RBI has been instructed by the government to maintain retail inflation at 4% with a 2% buffer on each side. Retail inflation based on the consumer price index decreased to 4.25 percent in May.

MPC member and deputy governor Michael Debabrata Patra said that his vote to preserve the status quo on the policy rate should be understood as adopting middle stump guard in preparation for a bumpier pitch while voting to keep the repo constant at 6.5 percent.

“Holding the rate unchanged should not be interpreted as the interest rate cycle having peaked, but rather as a period of careful evaluation of a decision on the extent of additional policy tightening, if needed,” he added.