“Our fundamental objective is to bring inflation in line with the 4 percent target and maintain inflation expectations,” Reserve Bank of India (RBI) Governor Shaktikanta Das said in a report published Friday.

Large supply-side shocks and repeated overlaps raise the risk of widespread inflationary impulses, possible loss of monetary policy credibility, and uncontained inflation expectations, he added.

India’s retail inflation fell to 5.02% in September, its lowest level in three months, thanks to falling vegetable prices.

“People are not increasing their spending due to high inflation and this is slowing business sales growth,” said Michael Patra, deputy governor of the RBI.

The monetary policy committee kept key interest rates on hold for the fourth consecutive meeting on October 6, as planned, but signaled it would keep interest rates high and liquidity tight to bring inflation closer to its target.

The Monetary Policy Committee also maintained its position of “withdrawing from accommodation” with a majority of five out of six votes.

Ashima Goyal, external member of the monetary policy committee, explained that the current position rules out a rate cut.

“This allows for an increase, but this will not be necessary unless repeated supply shocks cause second-round effects. So far, there are no signs of such aftereffects. .So the guidance is that future movements will be data dependent,” he said.

A second external member, Jayanth Varma, who voted against the position, said successive meetings promising to withdraw easing measures while keeping interest rates unchanged did not strengthen the credibility of the monetary policy committee.

“It would be helpful if the Monetary Policy Committee communicated its intention to keep real interest rates high enough for as long as necessary to bring inflation expectations sustainably closer to the 4% target.