India Can't Risk Another Inflation Surge: RBI Holds Policy Rates Steady | Shaktikanta Das

In the last Monetary Policy Committee (MPC) meeting held on October 9th, Reserve Bank of India kept interest rates unchanged at 6.5%. Now we have a better understanding of why there was no rate cut and where that decision came from. The RBI has released the minutes of the meeting. During that meeting Governor Shaktikanta Das highlighted the country's urgent need to avoid another bout of inflation. He emphasized that keeping inflation under control is essential to sustaining long-term economic growth. Inflation, which erodes purchasing power by increasing the cost of goods and services, can have severe economic consequences if left unchecked. High inflation can lead to rising interest rates, reduced investment, and a potential slowdown in economic activity, making it difficult for both consumers and businesses to plan for the future. At the heart of the debate during the MPC meeting was the decision to maintain the current policy repo rate at 6.5%, a rate that has remained unchanged for the tenth consecutive time. Governor Das voted to keep the rate stable, stressing that the current approach should remain flexible until inflation durably aligns with the Reserve Bank of India’s (RBI) target of 4%. He argued that monetary policy can only support sustainable growth if it also ensures price stability. Inflation in India has seen a near-term uptick, especially in food prices, creating uncertainty about when inflation will return to its target range. However, Das and other MPC members expressed optimism that inflation would begin to align more closely with the 4% target towards the end of the year and early next year. By maintaining the status quo on policy rates and adopting a neutral stance (as opposed to the previous “withdrawal of accommodation”), the RBI aims to monitor inflationary trends while avoiding policy decisions that could destabilize the economy. Deputy Governor Michael Debabrata Patra echoed Das’s view, advocating for a gradual "wait-and-assess" approach. He suggested that rushing to cut rates could lead to policy errors with significant costs. Rajiv Ranjan, RBI Executive Director, also supported maintaining the current rate, citing India’s resilient growth and the need for clarity on external uncertainties before making changes. While most members agreed on maintaining the rate, one external member, Nagesh Kumar, advocated for a 25 basis point rate cut. He argued that inflationary expectations are now anchored, and a cut could revive flagging industrial demand. Despite this, the majority agreed that the current policy should remain stable to safeguard the economy from further inflationary risks The MPC's decision to hold rates reflects a cautious approach to avoid the detrimental effects of inflation while continuing to monitor economic conditions closely. .............................................................................................. News9 is India's first fully integrated English news brand across all digital platforms. It includes a publishing platform, viz. www.news9live.com, a future-ready OTT platform, News9 Plus, and a 24-Hour video streaming service on connected TVs and all social platforms. It's the English news brand that understands and fits perfectly into the digital-first lifestyles of our English news audiences. ► News9 Plus Website : https://www.news9plus.com/all ► News9 Plus App : https://news9plus.app.link/aPwz3P2psMb ► News9 OTT Coupons : https://bit.ly/4dwLDx4 ► Watch us on YouTube :    / news9live   ► Like us on Facebook :   / news9live   ► Follow us on Instagram :   / news9live   ► Follow us on Twitter :   / news9tweets