'Justification for policy easing at this stage can be misleading"

Reserve Bank Governor Shaktikanta Das also observed that inflation is gradually trending down, but the pace is slow and uneven

The current policy rate of 6.5 per cent is broadly balanced, and any justification for policy easing at this juncture can be misleading, RBI Governor Shaktikanta Das opined while voting for the status quo on the repo rate in the MPC, where two members advocated rate cut.

The meeting of the Monetary Policy Committee (MPC), which decides on the policy rate, was held from August 6 to 8. On August 8, the RBI announced to keep the benchmark interest rate unchanged for the ninth time in a row, saying it cannot afford to look through persisting high food inflation and has to remain vigilant to prevent spillover.

According to the minutes of the last MPC meeting released by the RBI on Thursday, the calibrated increase in policy repo rate by 250 basis points since May 2022 and subsequent change of stance to the withdrawal of accommodation have facilitated gradual disinflation over 2022-23. “With a forecast of 4.5 per cent headline inflation for 2024-25, the present policy repo rate is broadly in balance and avoids costly sacrifice of domestic economic activity,” the minutes quoted Das as saying.