RBI Governor said - there is no justification for relaxation in the current situation
The meeting of the MPC, which takes decisions on policy rates, was held between August 6 and 8 and two members advocated reducing the repo rate. On August 8, RBI announced to keep the repo rate unchanged for the ninth consecutive time. Two other members of the MPC, Ashima Goyal and Jayant R Verma, advocated a cut in the repo rate by 25 basis points.
"It is, therefore, important that at this point policy rates continue at reasonable levels, as any weakening now in the stance of controlling inflation can cause a process to get haywire. This is what RBI Governor Shaktikanta Das said while voting for retaining the repo rate at 6.5 percent in the meeting of the Monetary Policy Committee (MPC).
The MPC, which decides on policy rates, met between August 6 and 8, with two members having already voted for a cut in the repo rate. On August 8, the RBI announced that the repo rate had continued for the ninth consecutive time and said it could not take renewed risks on persistently high food inflation.
"The meeting for the next MPC is now scheduled for October 7 to 9, 2024. Details of the latest MPC meet say that RBI Governor Shaktikanta Das has said the current repo rate stands justifiedly balanced so long as the 2024-25 target of 4.5 percent gross inflation is kept in mind.
"Inflation is slowly but surely coming down. Its path is expectedly slow and uneven," he said. Deputy Governor and MPC member Debabrata Patra said that the gap between gross inflation with food inflation has widened.
Two other members, however, out of the five-member MPC—Ashima Goyal and Jayant R Verma—voted for a 25 basis points cut in the repo rate. Goyal said the economic growth is high but it has to be taken to its full potential.
