Mumbai: Reserve Bank of India's Governor Shaktikanta Das said the central bank has refrained from giving forward guidance in the current tightening cycle because it can become counter-productive.
The governor was responding to the media in a post-meeting news conference on a query on forward guidance on Wednesday. Forward guidance offers central bankers the opportunity to guide the expectations of the future policy stance and reduce uncertainty about the state of the economy and the policy process.
"We need to see a decisive moderation in inflation. We have to remain unwavering in our commitment to bring down inflation," RBI Governor said during the announcement of the outcome of the Monetary Policy Committee on Wednesday.
The RBI MPC, led by Governor Shaktikanta Das, hiked the repo rate by 25 basis points to 6.5 per cent on Wednesday. The press conference of the mediapersons happened after the announcement of the outcome of the MPC meet.
According to the governor, a rate hike of 25 basis points is considered as appropriate at the current juncture. "The reduction in the size of the rate hike provides the opportunity to evaluate the effects of the actions taken so far on the inflation outlook and on the economy at large," he added.
Das-headed Monetary Policy Committee (MPC) started its three-day meeting on February 6 amid the rate hiking spree that started in May last year to check inflation.
The Monetary Policy Committee consists of three RBI officials and three external members which are appointed by the central government. This week's monetary policy is seen as crucial as it will be the RBI's first policy stance for the calendar year 2023 and comes exactly one week after Union Finance Minister Nirmala Sitharaman unveiled the Union Budget 2023-24 in the Parliament on February 1.
The MPC members include RBI Governor Das, Executive Director Rajiv Ranjan and Deputy Governor Michael Debabrata Patra.
The external members are National Council of Applied Economic Research Senior Advisor Shashanka Bhide; Indira Gandhi Institute of Development Research Emeritus Professor Ashima Goyal; and Indian Institute of Management-Ahmedabad Professor Jayanth R Varma.