Taming inflation will be the Reserve Bank of India’s priority even as the tendency is for it to cross the upper tolerance band while growth projections are headed southwards.

All the members of the monetary policy committee expressed concern over this, according to the minutes of its latest meeting held from 6-8 April. They have also expressed that risks to domestic growth warranted continued monetary policy accommodation.

Estimates now point to inflation remaining above the upper tolerance band in the near-term even as growth projections have undergone downward revisions, RBI Governor Shaktikanta Das said.

“These are indicative of the sheer magnitude of the adverse exogenous supply and price shocks. While the risks to domestic growth call for continued accommodative monetary policy, inflationary pressures necessitate monetary policy action,” Das added.

The RBI left the repo rate unchanged at 4% for the 11th time in a row while introducing the Standing Deposit Facility (SDF) to suck out excess liquidity from lenders. Inflation has been climbing and the Russia-Ukraine war has darkened the outlook. In March, India’s retail inflation for March was at 6.95%.

Meanwhile, RBI Deputy Governor Michael Patra said the alarm about inflation has become globalised. “"With 60% of developed countries facing inflation above 5% — unheard of since the 1980s — and more than half of the developing countries experiencing inflation above 7%, the climb in prices is testing societal tolerance levels,” he said during the meeting.

The RBI has raised its inflation forecast to 5.7% while lowering the GDP growth forecast to 7.2% for 2022-23.