RBI Policy
Changed stance to neutral as earlier stance achieved objective
This story was originally published at 15:26 IST on 9 October 2024
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--RBI Das: Changed stance as growth-CPI balance seen well-poised
--RBI Das: Can't say change in stance a pivot
--RBI Das: Stance change gives us optionality, flexibility
--RBI Patra: Assess stance change independent of near term CPI outlook
--RBI Das: No justification in continuing withdrawal of accommodation stance
--RBI Das: Achieved what we wanted with withdrawal of accommodation stance
--RBI Das: Changed stance as future full of uncertainties
NEW DELHI – The Monetary Policy Committee changed the policy stance to 'neutral' as the earlier stance of 'withdrawal of accommodation' achieved its objective, Reserve Bank of India Governor Shaktikanta Das said Wednesday. The rate-setting panel on Wednesday changed the stance, the first change since June 2022, but left the repo rate unchanged at 6.50% for the 10th consecutive meeting.
"The fact that growth and inflation are well poised goes a long way to show that the flexible inflation targeting framework is working and has proved its mettle," Das said at a press conference after the monetary policy meeting. "In such circumstances, when inflation and growth are well-balanced, there was no justification to continue with the withdrawal of accommodation," the governor said.
"We have achieved what we wanted to achieve, now the future path is full of uncertainties, which cannot be underestimated."
The governor said the timing was correct for a stance change with the balance between inflation and growth seen 'well-poised.' The central bank kept its GDP growth and CPI inflation forecasts for 2024-25 (Apr-Mar) unchanged at 7.2% and 4.5%, respectively.
Asked if the change in stance is a pivot in monetary policy, Das said that "it is for you to assess whether it is a pivot and the neutral stance gives us optionality and flexibility to take decisions".
RBI Deputy Governor Michael Patra said the stance should be assessed "by itself, independently". "We want to see off the near-term hump in inflation before even considering the next move," the deputy governor said.
According to RBI's projections, CPI inflation is seen rising to 4.8% in Oct-Dec, before it eases to 4.2% in Jan-Mar. Das said that the September CPI inflation print, which will be released on Monday, is expected to see a sharp jump because of a base effect. He added that even the October inflation print could be higher at around 5%. End
Reported by Shubham Rana
Edited by Saji George Titus
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