Reserve Bank OF India (RBI) Governor Shaktikanta Das has said that the resurgence of inflation in May and June reignited the debate on the monetary policy response. The minutes of the last MPC meeting showed that Das said that the approach by the RBI, bolstered by careful guidance on all aspects in the conduct of monetary policy, has been an important facilitator for the cusp of recovery that the country is witnessing at the present juncture.
Given the uncertainties on account of the Covid pandemic, Das opined that continued policy support with a focus on revival and sustenance of growth was the most desirable and judicious policy option at the moment. Das, according to the minutes of the MPC meeting released on Friday, also underlined the need for closely monitoring the price situation with a view to anchoring inflation expectations. "The need of the hour is twofold: first, continue the monetary policy support to the economy; and second, remain watchful of any durable inflationary pressures and sustained price momentum in key components so as to bring back the CPI inflation to 4 percent over a period of time in a non-disruptive manner," he said.
All members of the Monetary Policy Committee (MPC) had unanimously voted to keep the policy repo rate unchanged at 4 percent after the three-day meet of the panel earlier this month. Further, except Varma, other members voted to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.