The minutes of Reserve Bank of India's newly appointed Monetary Policy Committee (MPC) meeting released on October 18, showed that broad worries over economic growth and relief from the pullback in inflation led the Reserve Bank of India’s (RBI) to cut rate earlier this month.
The minutes of the two-day meeting on October 3-4, where all six members of the committee unanimously voted for a 25-basis-point rate cut, showed that all the members agreed on the need to boost growth at the current juncture with excess capacity in the economy and softening food prices unlikely to pose much risk to inflation.It also revealed all members expecting inflation to be in line with Reserve Bank of India's March-end target of 5 percent.
The minutes further showed that while Governor Urjit Patel was brief in his views and expressed confidence in achieving the RBI's March-end inflation target, Executive Director M D Patra highlighted the need to remain vigilant once inflation starts moving up in the January-March quarter. Retail inflation as measured by the Consumer Price Index had been rising in April-July, especially on higher prices of pulses and vegetables.
The Reserve Bank of India's monetary policy committee has three members from the central bank and three external members appointed by the government with the governor having a tie-break vote. This was the first time the rate decision was taken by the MPC, as against past instances where the governor of the central bank was the sole arbiter. The next meeting of the MPC is scheduled on December 6 and 7, and its resolution will be announced on December 7.
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