New Delhi -°C
Today in New Delhi, India

Oct 28, 2020-Wednesday
-°C

Humidity
-

Wind
-

Select Country
Select city
ADVERTISEMENT
Home / Business News / Inflation a major concern for MPC

Inflation a major concern for MPC

India’s retail inflation accelerated to 6.93% in July from 6.23% in June, remaining above the MPC’s target range of 2-6%, while food inflation rose to 9.62%.

business Updated: Aug 21, 2020, 08:22 IST
Gopika Gopakumar
Gopika Gopakumar
Mint, Mumbai
RBI governor Shaktikanta Das suggested giving it time for past interest rate cuts take effect.
RBI governor Shaktikanta Das suggested giving it time for past interest rate cuts take effect.(ANI File Photo)

Concerns over persistently high inflation dominated discussions at the Reserve Bank of India’s (RBI) monetary policy committee (MPC) 4-6 August meeting that kept policy rates unchanged, minutes released on Thursday showed.

Committee members extensively discussed potential challenges from stubborn retail price inflation, which has stayed above RBI’s tolerance band for nearly three quarters. The panel also discussed possible supply-side shocks from lockdown-related disruptions, before deciding to continue with the accommodative stance to nurture an economic recovery.

RBI governor Shaktikanta Das suggested giving it time for past interest rate cuts take effect. “I also feel that we should wait for some more time for the cumulative 250 basis points reduction in policy rate since February 2019 to seep into the financial system and further reduce interest rates and spreads. Given the uncertain inflation outlook, we have to remain watchful to see that the momentum in inflation does not get entrenched, which is also dependent on effective supply-side measures,” Das said.

India’s retail inflation accelerated to 6.93% in July from 6.23% in June, remaining above the MPC’s target range of 2-6%, while food inflation rose to 9.62%. However, the central bank’s battle against inflation is complicated by the gloomy prospects on India’s gross domestic product, which is expected to contract 21.5% in the June quarter and 5.8% in FY21, according to RBI’s Survey of Professional Forecasters on Macroeconomic Indicators.

ht epaper

Sign In to continue reading