All the six members of the monetary policy committee (MPC) of the RBI, including governor Shaktikanta Das, expressed concern over continued high inflation and stressed that the central bank’s endeavour would be to bring down price rise within the target range, as per minutes of the latest MPC meeting released on Wednesday.

The Reserve Bank’s rate-setting panel, which met during June 6-8, raised the key interest rate by 50 basis points -- the second hike within five weeks. In early May, the policy repo rate was hiked by 40 basis points.

As per the minutes, Das said while high inflation continues to be the major concern, revival of economic activity remains steady and is gaining traction. The time is appropriate to go for a further increase in the policy rate to effectively deal with inflation and inflation expectations.

“Accordingly, I vote for a 50 bps increase in the repo rate which would be in line with the evolving inflation-growth dynamics and will help in mitigating the second round effects of adverse supply shocks,” he said.

The rate hike, he added, will reinforce the RBI’s commitment to price stability — its primary mandate and a pre-requisite for sustainable growth over the medium term.

MPC member and RBI deputy-governor Michael Debabrata Patra said the global inflation crisis is just the face of one of the most severe food and energy crises in recent history that now threatens the poor across the globe.

“The battle would be lost but the war would have been won if India is able to bend down the future trajectory of inflation,” he said, and exuded confidence retail inflation would fall back to below 6 per cent by the fourth quarter of the fiscal.

US fears

Jerome H. Powell, the chair of the US Federal Reserve, said that officials are looking for “compelling evidence” that rapid inflation is easing as they try to restore price stability in the US, reiterating the central bank’s commitment to wrestling cost increases under control at an uncertain moment.

“Inflation has obviously surprised to the upside over the past year, and further surprises could be in store,” Powell said in a testimony prepared for delivery to the American Senate Banking Committee.

US inflation, as measured by the consumer price index, is running at 8.6 per cent, the fastest pace in more than four decades, having re-accelerated in May thanks to surging gas prices and airfares.

Although the economy remains strong and unemployment is historically low at 3.6 per cent, the fast price increases have prompted the Fed to adjust its policy at an increasingly rapid pace to try to cool demand.

“We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses,” Powell said on Wednesday.

“It is essential that we bring inflation down if we are to have a sustained period of strong labour market conditions that benefit all.”

“Aggregate demand is strong, supply constraints have been larger and longer-lasting than anticipated, and price pressures have spread to a broad range of goods and services,” Powell said on Wednesday.