Mumbai (Maharashtra) [India], December 20 : Strong foundations for high growth can be secured only with durable price stability, the monetary policy committee of the Reserve Bank of India (RBI) emphasized before keeping the policy rate unchanged in the latest meeting.
"The MPC emphasises that strong foundations for high growth can be secured only with durable price stability," the minutes of the three-day monetary policy meeting held in early December read.
The MPC remains committed to restoring the balance between inflation and growth in the overall interest of the economy, the minutes documents released Friday showed.
Accordingly, the MPC decided to keep the policy repo rate unchanged at 6.50 per cent, its eleventh on a trot.
"The MPC also decided to continue with the neutral stance of monetary policy as it provides flexibility to monitor the progress and outlook on disinflation and growth and to act appropriately. The MPC remains unambiguously focused on a durable alignment of inflation with the target, while supporting growth," the minutes read.
The MPC noted that the near-term inflation and growth outcomes in India have turned somewhat adverse since the October policy.
Going forward, the central bank believes that economic activity is set to improve along with rising business and consumer sentiments.
The recent spike in inflation highlights the continuing risks of multiple and overlapping shocks to the inflation outlook and expectations.
Heightened geopolitical uncertainties and financial market volatility add further upside risks to inflation. It added that high inflation reduces the purchasing power of both rural and urban consumers and may adversely impact private consumption.
Retail inflation continues to remain a pain point for the policymakers in India, who wish to bring retail inflation to 4 per cent on a sustainable basis.
India's retail inflation in November was at 5.48 per cent as compared to 6.21 per cent logged in October.