MUMBAI- India’s monetary policy committee (MPC) will remain focused on aligning inflation to its target of 4 percent , and only after it achieves that on a sustained basis, will its attention shift to the objective of growth, the October meeting minutes showed.
“Our fundamental goal is to align inflation with the 4 percent target and anchor inflation expectations,” Reserve Bank of India (RBI) Governor Shaktikanta Das said in the minutes released on Friday.
Recurring incidences of large and overlapping supply-side shocks bring with them the risks of generalization of inflation impulses, possible loss of monetary policy credibility and de-anchoring of inflation expectations, he added.
India’s retail inflation eased to a three-month low of 5.02 percent in September on the back of softer vegetable prices.
“There is also growing evidence that inflation is undermining growth — people are not increasing discretionary spending in view of high inflation and this is slowing sales growth of corporations,” RBI Deputy Governor Michael Patra said.
The MPC kept its key lending rate steady for a fourth consecutive policy meeting on Oct. 6, as widely expected, but signaled it would keep rates high and liquidity tight to bring inflation closer to its target.
The MPC also retained its “withdrawal of accommodation” stance by a majority of five out of six votes.
