RBI MPC Minutes: Members of the Monetary Policy Committee of the Reserve Bank of India have termed food inflation as a major risk. RBI MPC members have justified the central bank's stance on policy rates. The minutes of the meeting of the Monetary Policy Committee of RBI held in the first week of April 2024 have been released from which things have emerged.
Food inflation the biggest risk
Minutes of the Monetary Policy Committee meeting of the Reserve Bank of India were released on 19 April 2024. In the MPC meeting, the members have expressed their confidence in the current stance of RBI regarding monetary policy. But these members are worried about food inflation. MPC member Michael Debabrata Patra said, the data coming out regarding the impact of current inflation and food inflation rate is enough to show that the risk of food inflation remains. He has expressed the possibility of prices increasing due to increase in temperature by May 2024. He wrote in his note that due to the rising global food prices and other reasons, it is likely that the inflation rate will remain in the tolerance band of 2 to 6 percent till the second quarter of the financial year 2024-25. According to him, now is not the right time for any change in the policy stance.
Need to be alert about inflation
RBI Governor Shaktikanta Das said, it is estimated that the inflation rate may come down to 4.5 percent in 2024-25. Fluctuations in supply-side shocks and global tensions are emphasizing on monetary policy that there is a need to be extremely cautious about inflation. The RBI Governor has expressed his confidence in the growth of the Indian economy due to strength in demand in rural areas, increasing consumer confidence, increase in private consumption and other reasons. RBI Governor said, to reduce the inflation rate, the gains made in the last two years will have to be maintained. He said that work will have to be done to bring the inflation rate to the target of 4 percent. However, another member of the RBI MPC, Jayant Verma, cast his vote for cutting the repo rate by 25 basis points.
Global tension increased
However, a lot has changed after the MPC meeting of RBI. Global tension has increased since Israel's attack on Iran. A rise is being seen in the prices of commodities including crude oil. Due to which there is a danger of increasing inflation, a continuous decline is being seen in the stock markets.
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