RBI governor Shaktikanta Das and deputy-governor Michael D Patra have warned against a premature pause in the current rate tightening cycle as price rise remains a challenge amid unrelenting core inflation.

Minutes of the MPC’s meeting held between December 5 and December 7 showed both Das and Patra voicing their views against a pause in rate hike.

“I am, therefore, of the view that a premature pause in monetary policy action would be a costly policy error at this juncture. Given the uncertain outlook, it may engender a situation where we may find ourselves striving to do a catch-up through stronger policy actions in the subsequent meetings to ward-off accentuated inflationary pressures,’’ Das said.

He added that the RBI’s successive rate actions since May this year are working through the system and given the elevated inflation levels, particularly the stickiness in core inflation, further calibrated monetary policy action is warranted to contain buildup in underlying inflationary pressures, keep inflation expectations anchored and bring inflation closer to the target rate of 4 per cent over the medium term.

The RBI governor observed that though headline inflation is moderating, it is at a slow pace. Moreover, while the worst of inflation is over, it remains above the upper tolerance level.

He pointed out that inflation is expected to decline in the first half of 2023-24 but would still be well above the target of 4 per cent.

“Uncertainties surrounding the inflation trajectory remain sizeable, given the geopolitical tensions, global financial market volatility, pending pass-through of input costs to domestic output prices and weather-related disruptions.”

“Core inflation (CPI excluding food and fuel) is exhibiting persistence around 6 per cent for the past few months. Hence, there is no room for complacency and the battle against inflation is not over. This necessitates a constant vigil on prices,’’ he said.

Deputy-governor Patra said that inflation in India remains “unconscionably elevated’’, persistent and generalised, despite a moderation in October which was entirely due to favourable base effects.

He was of the view that core inflation remains unyielding and diffused, with a rising price momentum as it tests the upper tolerance band on its own, warranting a resolute monetary policy resolve.