The RBI's monetary policy committee (MPC) brainstormed the impact of any future shocks on the inflation trajectory and stressed monitoring the cumulative effect of monetary policy actions over the past one year, which is still unfolding, revealed the minutes of the rate-setting panel released on Thursday.

The minutes of the meeting of MPC, headed by Reserve Bank governor Shaktikanta Das, also indicated it would be premature to declare an end to the monetary tightening cycle, which started in May 2022 to check high inflation following the outbreak of the Russia-Ukraine war.

The central bank, which effected six back-to-back hikes in the key short-term lending rate (repo) since May 2022 to check high inflation, decided to take a pause early this month. The cumulative rate hike since May 2022 is 250 basis points.

All six members of the MPC — three RBI officials and three appointed by the government — voted for pausing the rate at 6.5 per cent in the meeting held during April 3-6.

"The cumulative impact of our monetary policy actions over the last one year is still unfolding and needs to be monitored closely," Das said during the last MPC meeting held during April 3-6.

Inflation for 2023-24 is projected to soften, but the disinflation towards the target is likely to be slow and protracted. The projected inflation in Q4:2023-24 at 5.2 per cent would still be well above the target, he noted.

"Therefore, at this juncture, we have to persevere with our focus on bringing about a durable moderation in inflation and at the same time give ourselves some time to monitor the impact of our past actions," the governor noted.

Das said, "I am, therefore, of the view that we do a tactical pause in this meeting of the MPC", as per the minutes of the MPC meeting released by the RBI.

MPC member Jayanth R Varma said the projected fall in the inflation rate would be a consequence of what the panel has already done, and not what it will do in the coming months.

"At the same time, it is clear that the war against inflation has not yet been won, and it would be premature to declare an end to this tightening cycle," said Varma.

RBI deputy-governor and MPC member Michael Debabrata Patra said that an ongoing assessment of the macroeconomic outlook of the economy should inform a preparedness to re-calibrate monetary policy towards a more restrictive stance with consistent actions.