While risks to domestic growth warrant continued monetary policy accommodation, rising inflationary pressures have necessitated action, almost all members of Reserve Bank of India’s (RBI) monetary policy committee said, according to the minutes of its latest meeting.
The Reserve Bank of India earlier this month started to move away from its ultra-loose monetary policy even as it kept its key lending rate at a record low, as its priorities shifted to fighting surging inflation in the wake of the Russia-Ukraine war.
“Circumstances warrant prioritising inflation and anchoring of inflation expectations in the sequence of objectives to safeguard macroeconomic and financial stability, while being mindful of the ongoing growth recovery,” Governor Shaktikanta Das wrote in the minutes.
In a surprise move, the central bank restored its liquidity adjustment facility corridor to pre-crisis levels, which was seen as a first step to moving away from emergency measures embraced during the COVID-19 pandemic.