The RBI governor said that despite resilient GDP growth and stable financial conditions, the goal of reaching a 4 per cent CPI remains distant.

“Any shift in policy stance now would be premature and risky. Further, with past rate hikes still working through the economy, it would be desirable to closely monitor their full play out. The conditions ahead could be fickle and call for prudent evaluation of the emerging situation. Considering all the above factors, a pause in rate action and remaining focused on withdrawal of accommodation is considered necessary,” Das said.

During the monetary policy committee meeting held between December 6 to 8, all members — Shashanka Bhide, Ashima Goyal, Jayanth R. Varma, Rajiv Ranjan, Michael Debabrata Patra, and Shaktikanta Das— unanimously voted to keep the repo rate at 6.50 per cent. The decision aligns with their commitment to withdrawing accommodation for inflation alignment with the target while supporting growth.

The MPC also decided to remain focused on withdrawal of accommodation to “ensure that inflation progressively aligns to the target, while supporting growth”.

However, Jayanth R. Varma expressed reservations on the stance, advocating for neutrality or no stance. “I believe that a stance is not needed at all at this stage. If at all there is a stance, it should be neutral,” he said.

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Rajiv Ranjan suggested a potential shift to a neutral stance but emphasised the need for consolidation amidst uncertainties. “A change to neutral stance may have to bear the brunt of the collateral damage caused by wrong signalling, particularly with looming uncertainties on the horizon and when market expectations are running ahead of policy intent,” he said.

Deputy governor Michel Patra underscored assigning higher weight to inflation in the monetary policy reaction function, voting to maintain the status quo on the policy rate and continue with the withdrawal of accommodation.

Ashima Goyal, while voting to keep the repo rate and stance unchanged, emphasised the importance of monitoring the impact of expected food inflation. Despite concerns, she acknowledged that current supply shocks have not reversed the decline in core inflation.

With inflation projected above 5 per cent until Q1: 2024-25, RBI governor voted to keep the repo rate unchanged “to ensure that inflation progressively aligns with the target, while supporting growth”.