Reserve Bank will have to constantly re-assess the “dynamic and fast changing situation” and tailor its actions accordingly, Governor Shaktikanta Das said during the recent meeting of the Monetary Policy Committee (MPC) which decided to maintain status quo on key interest rate.
According to the minutes of the six-member MPC meet released by Reserve Bank of India (RBI) on Friday, the five other members had also expressed a similar opinion amid the ongoing Russia-Ukraine conflict’s impact on the global and domestic economies.
MPC, which held its meeting from April 6-8, unanimously decided to keep the borrowing costs unchanged at a record low for the 11th time in a row in a bid to continue supporting economic growth despite inflation edging higher in the aftermath of Russia-Ukraine conflict.
The central bank’s MPC has six members, including the governor.
“The situation is dynamic and fast changing, and we should constantly re-assess the situation and tailor our actions accordingly,” Das said.
MPC member and RBI Deputy Governor Michael Debabrata Patra had opined that in a world in which de-globalisation seems imminent, one thing has become globalised and that is the alarm about inflation, as per the minutes.
“With 60 per cent of developed countries facing inflation above 5 per cent — unheard of since the 1980s — and more than half of the developing countries experiencing inflation above 7 per cent, the climb in prices is testing societal tolerance levels,” he had said during the meeting.
While RBI decided to maintain status quo, it raised inflation forecast to 5.7 per cent for the current fiscal, up from its 4.5 per cent estimate in February.
RBI also lowered the economic growth forecast to 7.2 per cent for 2022-23 from the previous outlook of 7.8 per cent. This compares to real GDP growth of 8.9 per cent in 2021-22.