Global Uncertainty Complicates Fight Against Inflation: RBI MPC Minutes

The continuing global uncertainity has complicated the fight against inflation, opined Reserve Bank Deputy Governor Michael Debabrata Patra during the Monetary Policy Committee meeting held on February 8.

According to the minutes of the MPC meeting released on Wednesday, RBI Governor Shaktikanta Das also mentioned that there is considerable uncertainty due to a host of global factors such as rising non-oil commodity prices.

The RBI on February 8 hiked the key short-term lending rate by 25 basis points to 6.5 per cent, citing sticky core inflation. It was the sixth interest rate hike by the Reserve Bank of India (RBI) since May last year, taking the total quantum of increase to 250 basis points.

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“The fight against inflation is complicated by the global outlook. There is some consensus growing around a milder slowdown than earlier feared, although geographical disparities complicate the prognosis. Be that as it may, the outlook for global inflation is turning more uncertain than before,” Patra opined as per minutes of the Monetary Policy Committee (MPC).

Das, who heads the six-member MPC, also said overall, there is considerable uncertainty at this stage on the evolving inflation trajectory due to ongoing geopolitical tensions, global financial market volatility, rising non-oil commodity prices, volatile crude oil prices and also weather-related events.

He also said 25 basis points rate increase provides space to calibrate future monetary policy actions and stance based on evolving macroeconomic conditions.

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