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    RBI MPC Minutes: Governor Shaktikanta Das says taming inflation a priority

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    RBI MPC Minutes: Governor Shaktikanta Das says taming inflation a priority

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    As per the minutes, Das said, "The current geopolitical situation has led to an upward revision of our inflation projections for 2022-23. The estimates now point to inflation remaining above the upper tolerance band in the near-term even as growth projections have undergone downward revisions. These are indicative of the sheer magnitude of the adverse exogenous supply and price shocks."

    RBI Governor Shaktikanta Das said the current circumstances warrant prioritising inflation and anchoring inflation expectations in the sequence of objectives to safeguard macroeconomic and financial stability, while being mindful of the ongoing growth recovery, showed MPC minutes released by the central bank on Friday.
    The Monetary Policy Committee (MPC) on April 8 had kept the repo rate unchanged at 4 percent for the eleventh consecutive time. However, it increased the reverse repo rate by 40 basis points to 3.75 percent from previous years' 3.35 percent.
    As per the minutes, Das said, "The current geopolitical situation has led to an upward revision of our inflation projections for 2022-23. The estimates now point to inflation remaining above the upper tolerance band in the near-term even as growth projections have undergone downward revisions. These are indicative of the sheer magnitude of the adverse exogenous supply and price shocks."
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    While the risks to domestic growth call for continued accommodative monetary policy, inflationary pressures necessitate monetary policy action, the governor said.
    "The increase in crude oil price and its direct and indirect effects on CPI contributed to around 60 percent of the upward revision in projections with the other major contributor being the spillovers coming from the global food price shocks on wheat, edible oil and feed cost pressures impacting on poultry, milk and dairy product prices.
    In the current scenario, continuation and further deepening of supply-side measures would alleviate food price pressures and also mitigate cost-push pressures across manufacturing and services, the governor added.
    RBI Deputy Governor Michael Debabrata Patra had opined that in a world in which de-globalisation seems imminent, one thing has become globalised and that is the alarm about inflation, as per the minutes.
    "With 60 percent of developed countries facing inflation above 5 percent -- unheard of since the 1980s -- and more than half of the developing countries experiencing inflation above 7 percent, the climb in prices is testing societal tolerance levels," he had said during the meeting.
    While RBI decided to maintain status quo, it raised the inflation forecast to 5.7 percent for the current fiscal, up from its 4.5 percent estimate in February.
    "If, as the projections show, inflation persists in high reaches, the drainage of liquidity already achieved and planned for the year ahead will reduce risks of excess liquidity fanning inflationary pressures and posing threats to financial stability," Patra said.
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