High inflation major concern for economy: Shaktikanta Das

Reserve Bank of India (RBI) governor Shaktikanta Das has cautioned that persistently high inflation is a serious concern for the economy.

As per meeting minutes released by the central bank on Wednesday, RBI Governor Shaktikanta Das warned that sustained high inflation is a serious concern for the economy even though economic activity is picking up. He made this statement while voting for a 50 basis point increase in the benchmark interest rate to curb price growth earlier this month.

The decision was made public on June 8 by the six-member Monetary Policy Committee (MPC), headed by Das. The repo rate increased for the second consecutive time. As per minutes of the three-day meeting , the governor mentioned that while high inflation remains a serious concern, the economic recovery is continuing to progress steadily. "To effectively combat inflation and inflation expectations, the timing is right to pursue a further hike in the policy rate. Accordingly, I vote for a 50 basis point hike in the repo rate, which would be consistent with the changing dynamics of inflation and growth and would aid in reducing the second-round consequences of unfavourable supply shocks, he added.

The rate hike will strengthen RBI's commitment to price stability i.e, its primary mandate and a pre-requisite for sustainable growth over the medium term. All the six members had voted to hike the policy repo rate by 50-bps to 4.9 percent.

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