While risks to domestic growth justify continuing monetary policy, mounting inflationary pressures have necessitated action, nearly all members of the Reserve Bank of India (RBI) monetary policy committee said, according to minutes from the latest meeting.
The Reserve Bank of India began moving away from its ultra-easy monetary policy earlier this month, even as it kept its key borrowing rate at an all-time low as its priorities shifted to fighting rising inflation in the wake of the war between Russia. and Ukraine.
“The circumstances justify prioritizing inflation and anchoring inflation expectations in the order of objectives to ensure macroeconomic and financial stability, while taking into account the ongoing recovery in growth,” Governor Shaktikanta Das wrote in minutes. .
As a surprising move, the central bank restored the liquidity adjustment facility corridor to pre-crisis levels, which was seen as a first step towards moving away from emergency measures embraced during the COVID-19 pandemic.