an acceleration in job gains to a very strong pace of around 350, 000 for both december and january. the unemployment rate remained low at 3. 7 percent. this appears to reverse the trend from last year, when the average pace of job gains slowed and the labor force participation rate rose through november, a sign that labor market demand and supply may have been coming into better balance. that said, today's jobs report with markedly stronger job growth and a labor force participation that has retraced some of its earlier gains suggests that progress has stalled over the past two months. considering these developments, i voted to maintain the policy rate at its current level while we continue to monitor the incoming data and assess the implications for the inflation and economic outlook. my baseline outlook is that inflation will decline further 1 / 7 bis - central bankers'speeches with the policy rate held at the current level. should the incoming data continue to indicate that inflation is moving sustainably toward our 2 percent goal, it will eventually become appropriate to gradually lower our policy rate to prevent monetary policy from becoming overly restrictive. in my view, we are not yet at that point. and a number of important upside inflation risks remain. these include risks from geopolitical conditions, including the prominent risk of spillovers from geopolitical conflicts and the extent to which food and energy markets and supply chains remain exposed to these influences. there is also the risk that continued easing in financial conditions could add momentum to demand, stalling any further progress in lowering inflation, or even causing inflation to reaccelerate. finally, there is a risk that continued labor market tightness could lead to persistently high core services inflation. today's labor market data, which indicated a pickup in wage inflation in recent months, suggests ongoing elevated wage growth as some businesses continue to report above - average wage increases to compensate for inflation. given these risks, and the general uncertainty regarding the economic outlook, i will continue to watch the data closely - especially the inflation data revisions next week and upcoming inflation reports - as i assess the appropriate path of monetary policy. the frequency and extent of data revisions over the past few years, as illustrated in today's employment report, make the task of predicting how the economy will evolve even more challenging, and i will remain cautious in my approach to considering future changes in the stance of policy. reducing our policy rate too soon could result in requiring further future policy rate increases to return inflation to 2 percent in the longer run. it is

' s borrowing programme or even interest rate changes by systemically important central banks. even shifts in international crude prices send them into a frenzy and as a result, the risk of transmission losses for domestic monetary policy rises. in the corporate bond market which uses g - sec yields as benchmarks, only issuers of the highest quality find favour and, as a result, issuers with lower ratings depend on banks. transmission to corporates across the entire spectrum of ratings, therefore, remains incomplete and / or delayed. the g - sec market's microstructure also tends to dampen transmission. with the holding pattern of g - secs dominated by " long only " investors with large held - to - maturity portfolios, a fall out is that liquidity tends to thin out along the curve and there are instances of short sales morphing into squeezes that can impact money market rates. there have been occasions during a rising interest rate scenario when'special'market repo rates have crashed to near zero, completely out of alignment with the monetary policy stance and imparting vortexes of volatility that obscure efficient price discovery. the impact of heterogenous expectations is also evident in the overnight index swap ( ois ) market, which sits at the confluence of money and g - sec markets. our experience has been that the ois market tends to overshoot. since the ois curve acts as the primary instrument for hedging interest rate risk in india, such front - running can distort transmission and unsettle expectations. moreover, the ois market is liquid only in select tenors and liquidity dries up beyond 5 years. consequently, hedging of longterm interest rate risk becomes difficult. this is an important reason why the corporate bond market is primarily a fixed rate market with tenors limited up to 5 years. credit market the bank credit market in india accounts for nearly half of the total flow of resources to the commercial sector of the economy. the practice of changes in deposit rates preceding changes in lending rates and sticky margins have been prime impediments to monetary policy transmission. on the one hand, term deposits are typically contracted at fixed rates. when the policy rate changes, term deposits are re - priced at the margin i. e., only in respect of deposits that mature and get renewed. on the other side, the mandated linking of lending rates for personal loans and micro, small and medium enterprises ( msmes ) loans