Minutes of the RBI’s last monetary policy committee meeting showed the members wanted the slow process of normalisation to continue, using what a Reserve Bank of India executive director called “Swiss knife-like” policy tools, though the strategy is at odds with the one followed by central banks of the US and UK.

At the December 6-8 meeting, a majority of the six-member committee said the RBI should stick with its policy to focus on growth and an accommodative stand on liquidity because of the Omicron scare and the fact that some sectors of the domestic economy are yet to reach the pre-pandemic levels of growth.

All the members had voted in favour of retaining the policy repo rate at 4 per cent at the meeting.

MPC member Jayanth Varma, who has been calling for a hike in the reverse repo rate, wanted the RBI to do away with its accommodative stand as there is increasing evidence of inflation becoming entrenched in the upper region of the tolerance band of 6 per cent though it is projected to remain within the ceiling.

Members cited the uneven recovery in the economy even as they were worried that the Omicron virus which is reportedly more transmissible than the other variants could pose a risk to global economic growth.

RBI governor Shaktikanta Das said there was growing uncertainty regarding the evolving global macroeconomic outlook. “On the domestic front, even as the prospects for economic activity are improving, there is still a slack with key drivers like private consumption remaining well below their pre-pandemic levels,” Das said.

“Given these uncertainties, continued policy support is warranted for a durable, broad-based and self-sustaining rebound, especially to nurture revival in sectors which are lagging and to safeguard those which are exposed to the evolving headwinds,’’ he said.

In such conditions, Das said, it would be prudent to watch out for growth signals becoming well entrenched while remaining vigilant on inflation dynamics.

RBI deputy-governor Michael Patra said even before the arrival of the new Covid-19 variant, the momentum of the global recovery and of world trade was ebbing in the second half of 2021, including in countries with relatively high vaccination rates.

He noted that with national income prints coming in lower for several countries, estimates suggest that global GDP growth is slowing by a full percentage point.