MPC opposed to a hasty pause in war on inflation

Members of the Reserve Bank of India's monetary policy committee (MPC) agreed to raise the repo rate by 25 basis points in February as it felt a pause would be premature in its fight against runaway prices, showed minutes of the meeting published on Wednesday.

- Shayan Ghosh

Inflation measured by the consumer price index (CPI) has moderated primarily due to lower vegetable prices, governor Shaktikanta Das said, adding that core inflationCPI excluding food and fuelis, however, elevated and sticky at around 6%.

"We must, therefore, remain unwavering in our commitment to bring down inflation to ensure a decisive and durable moderation in inflation towards the target of 4% over the medium term while being mindful of growth," Das said.

Therefore, further calibrated monetary policy action is necessary in the February meeting to keep inflation expectations anchored and break the persistence of core inflation, Das said. He justified his call for a 25-bps hike by saying that tapering the pace of the rate hike would allow time for past policy actions to show results and also because it would be too early to pause, "lest we are caught off-guard and need to do a catching-up later".