In order to “ensure a durable disinflation process”, the Reserve Bank of India moderately raised the repo rate by 25 basis points to 6.5 per cent on Wednesday. With this sixth consecutive rate hike, the Central bank has cumulatively raised the repo rate by 250 bps in the current cycle. Prior to the current hike, the RBI had raised the repo rate by 35 basis points in the December quarter and 50 basis points in the September quarter — signalling that the banking regulator has been on a path of moderation as it awaits the previous rate hikes to reflect as outcomes. In the meantime, the RBI made sure that monetary policy was not loosened altogether, and that it managed to buy some time to decide whether or not to pause the policy tightening in the future. Despite the last year being tough on all major and minor economies in terms of inflation, India proceeded smartly and cautiously in containing inflation. Walking the tightrope, India managed to use the very narrow cushion it had at its disposal in the form of resilient growth — even after the pandemic and amid the Russia-Ukraine war. It was India’s more or less stable growth that allowed its central bank to follow the global trend of monetary policy tightening without hurting the growth prospect in a major way. The growth-centric Union Budget, presented earlier this month, also provided significant elbow room for the RBI to go with the moderated rate hike. In fact, the most recent rate hike can also be seen as a measure to complement the fiscal focus of the Budget with monetary discipline. Given that anchoring inflation is the primary objective of the RBI, its relentless quest for price stability cannot be contested. It must also be noted that the need to have sustainable price stability is very pronounced at this juncture. The crude oil prices remain largely volatile and the Russia-Ukraine war is showing no signs of abatement. As per the RBI, even when the global economic outlook has improved, the clouds of uncertainties loom large on the external front. The vitality of price stability can be understood against this background. In the future, if any of the negative global factors undergo exacerbation, the magnitude of the follow-up risk for the domestic economy will depend on the price stability factor. Better price stability for the Indian economy will mean that the marginalised sections will not fall apart in case of unprecedented global economic shocks. If growth numbers present a picture of the current state of the economy, price stability indicates resilience against futuristic vagaries. The RBI has further left the gate open for policy tightening by maintaining a ‘hawkish’ tone and retaining the ‘withdrawal of accommodation' stance. It reflects the RBI’s confidence in the growth prospect of the nation. The Monetary Policy Committee (MPC) of the RBI has projected the real GDP growth at 6.4 per cent for 2023-24. The projections for Consumer Price Index, or the retail inflation, stand at 6.5 per cent in FY 2022-23 and at 5.3 per cent for FY 2023-24. The sub-optimal growth projection needs to be seen against the backdrop of strong base effect and external uncertainties. In terms of inflation, the ideal limit of 4 per cent will most likely elude the Indian economy in the upcoming fiscal as well. Furthermore, even as the CPI has moderated over the past couple of months, the core inflation, obtained after reducing food and fuel inflation, remains high. In fact, the Monetary Policy Committee itself pointed out that there has been a significant deflation in vegetable prices since the last months of the calendar year 2022. This trend is likely to be reversed as the summer approaches. This could lead to an increase in inflation on account of rising food prices. The RBI, thus, is right in its resolve to break the persistence of core inflation and thereby strengthen the medium-term growth prospects. In sum total, those waiting for a more accommodative stance or a temporary pause in policy rate hikes need to wait a bit longer. Around the world, Central banks of prominent economies are gradually shedding the tightening approach. But India, in line with the US Fed, is in no hurry to do that.