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MUMBAI: Differences between Reserve Bank of India officials and external members emerged in the June 8 monetary policy meeting minutes, with the central bankers taking a more hawkish stance while two members were worried about high interest rates hurting growth.
The RBI, on Thursday, released minutes of the MPC meeting, which resulted in all members voting for a pause in policy repo rate at 6. 5%. However, there were differences behind the “unanimous decisions”. RBI governor Shaktikanta Das believed that the fight against inflation wasn’t over and that the central bank needed to be ready to act if the situation demanded.
Job half done, fight against inflation not yet over: Das
Shaktikanta Das said, “Our job is only half done, having brought inflation within the target band. Our fight against inflation is not yet over. We need to undertake a forward-looking assessment of the evolving inflation-growth outlook and stand ready to act, if the situation so warrants”. He added that price stability and financial stability were mutually reinforcing and necessitated greater policy focus.
The economy has staged a robust recovery from the bruising impact of the pandemic and several crucial indicators point to the growth momentum gathering pace. While inflation has eased from high levels, uncertainties over the monsoon and the possibility of the El Nino weather phenomenon have emerged as warning signals over the price situation in the months ahead.
All members of the monetary policy committee — Shashanka Bhide, Ashima Goyal, Jayanth R Varma, Rajiv Ranjan, Michael Debabrata Patra and Shaktikanta Das — had unanimously voted to keep the policy repo rate unchanged at 6.5%. Bhide, Goyal, Rajiv Ranjan, Patra and Das voted to remain focusedon withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth. Varma had expressed reservations on this part of the resolution.
“As expected inflation fell. However, it is important that real repo rate does not rise too high. This is what happened in 2015 as international oil prices fell, damaging the economic cycle,” said external member Ashima Goyal. She added that committing to an inflation targeting regime involves aligning only the nominal rate with expected inflation. RBI deputy governor Michael Patra indicated that doors were open for further tightening.
The RBI, on Thursday, released minutes of the MPC meeting, which resulted in all members voting for a pause in policy repo rate at 6. 5%. However, there were differences behind the “unanimous decisions”. RBI governor Shaktikanta Das believed that the fight against inflation wasn’t over and that the central bank needed to be ready to act if the situation demanded.
Job half done, fight against inflation not yet over: Das
Shaktikanta Das said, “Our job is only half done, having brought inflation within the target band. Our fight against inflation is not yet over. We need to undertake a forward-looking assessment of the evolving inflation-growth outlook and stand ready to act, if the situation so warrants”. He added that price stability and financial stability were mutually reinforcing and necessitated greater policy focus.
The economy has staged a robust recovery from the bruising impact of the pandemic and several crucial indicators point to the growth momentum gathering pace. While inflation has eased from high levels, uncertainties over the monsoon and the possibility of the El Nino weather phenomenon have emerged as warning signals over the price situation in the months ahead.
All members of the monetary policy committee — Shashanka Bhide, Ashima Goyal, Jayanth R Varma, Rajiv Ranjan, Michael Debabrata Patra and Shaktikanta Das — had unanimously voted to keep the policy repo rate unchanged at 6.5%. Bhide, Goyal, Rajiv Ranjan, Patra and Das voted to remain focusedon withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth. Varma had expressed reservations on this part of the resolution.
“As expected inflation fell. However, it is important that real repo rate does not rise too high. This is what happened in 2015 as international oil prices fell, damaging the economic cycle,” said external member Ashima Goyal. She added that committing to an inflation targeting regime involves aligning only the nominal rate with expected inflation. RBI deputy governor Michael Patra indicated that doors were open for further tightening.
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