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RBI panel held rates over poor output, uneven growth


MUMBAI: The minutes of the October monetary policy committee (MPC) meeting released on Friday reveal that members chose to hold rates despite inflation concerns as recovery was uneven and output below pre-covid level. One member, Jayanth R Varma, has again called for an increase in the reverse repo rate. RBI governor Shaktikanta Das pointed out that the classical trade-off that central banks face between slowing growth and higher inflation is getting edgier. “With the outlook overcast by several uncertainties including the fact that the pandemic is far from over, we need to ensure that the nascent revival of economic activity shows signs of durability and sustainability. At this critical juncture, our actions have to be gradual, calibrated, well-timed and well-telegraphed to avoid any undue surprises,” said Das. Deputy governor Michael Patra said, “The formation of inflation is being buffeted by repeated shocks that have taken fuel inflation to an all-time high and turned core inflation persistent, with risks to the upside. Accordingly, it is important to remain on guard about second-order effects from these transitory perturbations that give these components of inflation a resistant character by their recurring incidence,” said Patra.


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