RBI Governor Urjit Patel voted for a rate hike at its policy meet earlier this month as a step towards keeping inflation below the mandated 4 per cent mark on a "durable basis", according to the minutes of the meeting released today.
Five of the six members of the all-powerful Monetary Policy Committee headed by Patel had voted for a 25 basis points hike in the benchmark lending rate (repo) on August 1.
It was RBI's second consecutive hike in the repo rate, which has risen to 6.5 per cent. The central bank had hiked the rate at its June policy meet as well.
"As inflation risks have continued to be elevated, I vote for an increase in the policy repo rate by 25 basis points; this action is a necessary step towards securing the mandated 4 per cent inflation target on a durable basis," Patel opined.
However, in view of several uncertainties that are present, "I maintain the neutral stance of monetary policy", the RBI Governor added.
RBI Deputy Governor Viral Acharya too voted for a hike in the policy rate as a step towards fulfilling inflation targeting mandate while paying attention to growth.
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"...there is an important interim uncertainty in the form of tariff wars which can rock global growth, financial markets and inflation in abrupt and unexpected ways, I vote to retain the neutral stance of monetary policy," Acharya said.
The minutes further said RBI Executive Director Michael Debabrata Patra said the economy was poised for an acceleration of growth in 2018-19 relative to 2017-18, but the drivers of growth are amorphous at this juncture.
He said softer inflation prints expected in the second quarter of the fiscal could likely lull inflation expectations, but abundant precaution and decisiveness in quelling risks to the target is warranted if the hard-earned gains in terms of macroeconomic stability and credibility have to be preserved.
IIM Ahmedabad Professor Ravindra H Dholakia was the only MPC member who did not favour a rate hike.
"This is certainly not the time and environment to hike the policy rate. Nor is it the time to tinker with the policy stance. Prudence lies in maintaining status quo on both," he said.
The fourth bi-monthly MPC meeting of the current fiscal is scheduled from October 3-5 here.
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