Mumbai: The central bank needs to remain watchful as the uncertainties of tariffs are still evolving, said RBI Governor Sanjay Malhotra while voting for a status quo on key interest rate earlier this month.
The Reserve Bank of India on Wednesday released Minutes of the Monetary Policy Committee (MPC) meeting held during August 4-6.
Along with the RBI Governor, all five other members of the MPC had voted for retaining the short-term lending rate (repo) at 5.5 per cent.
“Overall, our economy presents a picture of strength, stability, and opportunity. India’s strong fundamentals, growth-inducing policies, and forward-looking economic strategy clearly place it in a strong position,” the Governor said as per the minutes.
While growth has remained steady, inflation outcomes have been far more benign on account of higher food price moderation, he said.
“Although we are likely to see inflation undershooting the target in the near term, with a likelihood of monthly numbers even crossing the lower tolerance band of 2 per cent, headline inflation is projected to inch up from Q3 onwards. The uncertainties of tariffs are still evolving,” Malhotra said.
Given the current state of uncertainty on the external front, monetary policy needs to remain watchful, he opined.
