Monetary policy stance must remain disinflationary, says RBI report

Says GDP growth will receive 15-basis point boost from tax cuts

Following an unexpectedly sharp rise in the consumer price index (CPI)-based inflation in January, the state of the economy report of the Reserve Bank of India said inflation could be stubborn, and that the monetary policy stance needs to remain disinflationary, indicating that the central bank is unlikely to lower its guard on price stability.

The monetary policy committee (MPC) of the RBI increased the policy repo rate by 250 bps to 6.5 per cent between May 2022 and February 2023, with analysts predicting a pause from here on.

Highlighting that monetary policy actions were getting reflected in transmission channels,