Reverse repo rate rises to 7.5%.
- Likelihood of a rate action in December mid-quarter review “relatively low”
- If inflation trajectory conforms to projections further rate hikes may not be warranted
- But medium-term inflation risks in the economy “high”
- Necessary to persist with anti-inflationary stance even as impact of past monetary actions unfolds
- As inflation begins to decline, opportunity emerges for policy stance to consider growth risks
- Changing policy stance when inflation high entails risk to credibility of RBI’s commitment to low, stable inflation
