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The Monetary Policy Committee (MPC) voted by a majority of 5-1 to up the policy repo rate by 35 basis points to 6.25 per cent from 5.90 per cent even as 4 out of the 6 committee members decided to persist with the monetary policy stance of “withdrawal of accommodation’.
The MPC’s decision comes in the wake of retail inflation continuing to rule above its upper tolerance limit of 6 per cent and slowing growth.
RBI Governor Shaktikanta Das emphasised that market expectations and the decision of MPC are by and large aligned.
He noted that further calibrated monetary policy action is warranted to keep inflation expectations anchored, break core inflation persistence and contain second round effects.
He noted that further calibrated action by the MPC may be warranted even as the battle against inflation is not over.
The RBI revised the GDP growth projection for FY23 to 6.8 per cent (with risks evenly balanced) against 7 per cent earlier.
Das said even after the downward revision in GDP growth projection, India will still be among the fastest growing major economies globally.
The retail inflation projection for FY23 has been left unchanged at 6.7 per cent.
‘GDP growth in India remains resilient and inflation is expected to moderate; but the battle against inflation is not over. Pressure points from high and sticky core inflation and exposure of food inflation to international factors and weather-related events do remain.
‘While being watchful of the impact of our earlier monetary policy actions, we will keep Arjuna’s eye on the evolving inflation dynamics and be ready to act as may be necessary,’ the Governor said.
Das emphasised that the central bank’s actions will be nimble and in the best interest of the economy. The aspect of growth will obviously be kept in mind.
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