MPC Minutes: Too soon to lower guard against inflation, say majority of members

The minutes of the February monetary policy committee meet clearly show that inflation was the overarching worry for a majority of the MPC members. However, there was some difference of opinion as to the extent of concerns of inflation.
While 4 members voted for the 25 basis points rate hike that was announced, 2 members voted for a pause in the rate hikes.

Dr Ashima Goyal was of the opinion that it time should be given for a possible softening of both inflation and growth as well as to allow the effects of past monetary tightening to play out. Echoing a similar view, Prof Jayant Verma said that the 25 basis points rate hike was not warranted given diminished inflationary expectations, and heightened growth concerns.

However, RBI Governor Das said that the committment to bring down inflation must be unwavering, while being mindful of growth. On future action, the governor pointed out that it would be inadvisable to provide a specific guidance when the uncertainty is so high.

Similarly, Dr. Shashanka Bhide highlighted the importance of reducing demand pressure given the persistance of core inflation.

Dr. Rajiv Ranjan said that "it will be premature to pause when there are no definitive signs of slowdown in inflation, particularly core inflation".

Meanwhile, Dr. Michael Debabrata Patra voiced a similar sentiment and also highlighted that the fight against inflation is complicated by the global outlook.