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Reserve Bank of India (RBI) Governor Shaktikanta Das has said that bringing back inflation within the target band is like a job half done. He said ‘our fight against inflation is not yet over so we need to undertake forward-looking assessment of the evolving inflation-growth outlook and stand ready to act, if situation so warrants.’ It was for the second time in a row that the Monetary Policy Committee (MPC) headed by the Governor kept the short-term lending rate (repo) unchanged after continuously raising it since May 2022. 

As per the minutes of the MPC meeting, Das said India’s macroeconomic fundamentals are strengthening and growth prospects are steadily improving and becoming broad-based. He said inflation has eased and the external sector outlook has improved. Balance sheets of banks and corporates look resilient and healthy, thereby engendering twin balance sheet advantage for growth. He said ‘beyond this and given the prevailing uncertainties, it is difficult to give any definitive forward guidance about our future course of action in a rate tightening cycle.’

Meanwhile, the government has mandated the RBI to ensure retail inflation remains at 4 per cent, with a 2 per cent margin on either side. The consumer price index-based retail inflation came down to 4.25 per cent in May.