Focus on Inflation Control | 12 Feb 2024

The RBI’s Monetary Policy Committee (MPC) maintains its focus on curbing inflation by keeping the repo rate unchanged at 6.5% in February 2024 to align inflation with the 4% target.

The MPC aims to achieve a medium-term target of 4% inflation within a band of +/- 2%.
The MPC aims to withdraw accommodation gradually to align inflation with the target while supporting growth.
- An accommodative stance means the central bank is prepared to expand the money supply to boost economic growth.
- Withdrawal of accommodation will mean reducing the money supply in the system which will rein in inflation further.
A recent RBI Bulletin states that Headline inflation rose to 5.7% in December 2023, primarily driven by food inflation, emphasising the need for continued vigilance.
The MPC determines the policy interest rate required to achieve the inflation target. The RBI controls inflation and deflation by employing a variety of monetary policy tools such as:
- Repo rate, Reverse repo rate, Bank rate, Open market operations, Statutory liquidity ratio (SLR), Cash reserve ratio (CRR), Liquidity adjustment facility (LAF), and Market stabilization scheme.