Economy must adjust to recent rate hikes, eye on inflation needed: RBI MPC

RBI survey says manufacturers foresee hike in input costs, may raise selling prices; crude prices, tightening of financial conditions will impact investment demand, consumption will be sustained

The economy faces several uncertainties and upside risks from the continuous rise in oil prices, volatility in emerging economies’ financial markets, uncertainty surrounding the impact of increase in Kharif crop minimum support prices and the risk of fiscal slippage by central or state government(s). This was revealed in the minutes of the Reserve Bank of India’s (RBI) October monetary policy meeting.

While all members of the Monetary Policy Committee (MPC) voted in favour of a change in the RBI’s stance from “neutral” to “calibrated tightening”, only one member of the committee, Dr Chetan Ghate, voted for a 25 bps increase