Mumbai (Maharashtra) [India], Minutes of the Monetary Policy Committee (MPC) of the Reserve Bank of India, released on Friday, said the committee emphasized on removing accommodation to ensure that inflation progressively aligns with the medium-term goal of 4 percent, while continuing to support economic growth.
At its 49th meeting of the MPC, held between June 5 and 7, it was decided to maintain the status quo on key interest rates, reflecting a balanced approach to sustaining economic growth while keeping inflation low. control.
After extensive deliberations on current and evolving macroeconomic conditions, the MPC resolved to keep the policy repo rate unchanged at 6.50 percent. Accordingly, the standing deposit facility (SDF) rate remains at 6.25 percent, and the marginal standing facility (MSF) rate, along with the bank rate, remains at 6.75 percent.
MPC members Dr Shashanka Bhide, Dr Rajiv Ranjan, Dr Michael Debabrata Patra and Shri Shaktikanta Das voted in favor of keeping the policy repo rate unchanged at 6.50 per cent. While Dr. Ashima Goyal and Prof. Jayanth R. Varma voted in favor of reducing the official repo rate by 25 basis points.
Dr. Shashanka Bhide, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Shri Shaktikanta Das voted in favor of continuing to focus on the withdrawal of accommodative policy to ensure that inflation is progressively aligned with the target and at the same time support growth. Dr. AshimaGoyal and Professor Jayanth R. Varma voted in favor of a change of stance to neutral.
Commenting on his decision to keep the benchmark rate unchanged, RBI Governor Shaktikanta Das said: "Price stability is the basis for high and sustainable growth. Therefore, I vote to maintain the repo rate unchanged at 6.5 percent and continue with the stance of withdrawal from accommodation."
He added: "With food inflation persistently high, it would be wise to continue with the disinflationary policy we have adopted. Any hasty action in a different direction will cause more harm than good. It is important that inflation is durably aligned with the goal of the 4.0 per cent." MPC member Dr Shashanka Bhide said: "The rise in the projected inflation rate above the 4.5 per cent mark in the second half of the financial year reflects the underlying pressures As an important part of these price pressures are related to food inflation, it is appropriate to take a vigilant approach to ensure that there are no spillover effects. the high inflation of food on the prices of other items in the consumer basket".
She added: "With aggregate output projections for 2024-25 reflecting strong GDP growth, keeping monetary policy focused on achieving the inflation target on a lasting basis is appropriate at this time."
Dr Ashima Goyal said: "India cannot be compared with the US Federal Reserve in terms of rate cuts. India cannot cut rates before the US Federal Reserve. But The US has its own special problems that do not apply elsewhere. Many other central banks are cutting rates." He added: "India's falling current account deficit, inclusion in the index and the "Improved ratings add to the many reasons that make interest differentials with the US less important. India's inflation differential with the US is also narrowing again."
Professor Jayanth R. Varma said, "he argued for a 25 basis point rate cut because professional forecasters surveyed by the RBI project that growth in both 2025-26 and 2024-25 will be lower than in 2023-24 by more of 0.75 percent, and lower than the potential growth rate (of say 8 percent) by more than 1 percent."
He added: "This is an unacceptably high growth sacrifice, considering that headline inflation is projected to be only about 0.5 per cent above target, and core inflation is extremely benign." Dr Rajiv Ranjan called for maintain the status quo and said: "Broadly speaking, we are in a similar monetary policy environment as the last two bimonthly reviews. Growth remains strong and has surprised further to the upside. While core inflation has softened even more". , food inflation risks have remained elevated.
Dr Michael Debabrata Patra said: "Food prices are dampening any consideration of possible changes in monetary policy. The speed of the decline in inflation has been disappointing so far, even from a cross-sectional perspective. Food prices food persists for too long as the main impediment to faster disinflation.
He added: "The Indian economy remains hostage to interrelated food price shocks. Their repetitive occurrence calls for intensified surveillance of monetary policy to avoid contagion effects to other components of inflation and expectations."
At its 49th meeting of the MPC, held between June 5 and 7, it was decided to maintain the status quo on key interest rates, reflecting a balanced approach to sustaining economic growth while keeping inflation low. control.
After extensive deliberations on current and evolving macroeconomic conditions, the MPC resolved to keep the policy repo rate unchanged at 6.50 percent. Accordingly, the standing deposit facility (SDF) rate remains at 6.25 percent, and the marginal standing facility (MSF) rate, along with the bank rate, remains at 6.75 percent.
MPC members Dr Shashanka Bhide, Dr Rajiv Ranjan, Dr Michael Debabrata Patra and Shri Shaktikanta Das voted in favor of keeping the policy repo rate unchanged at 6.50 per cent. While Dr. Ashima Goyal and Prof. Jayanth R. Varma voted in favor of reducing the official repo rate by 25 basis points.
Dr. Shashanka Bhide, Dr. Rajiv Ranjan, Dr. Michael Debabrata Patra and Shri Shaktikanta Das voted in favor of continuing to focus on the withdrawal of accommodative policy to ensure that inflation is progressively aligned with the target and at the same time support growth. Dr. AshimaGoyal and Professor Jayanth R. Varma voted in favor of a change of stance to neutral.
Commenting on his decision to keep the benchmark rate unchanged, RBI Governor Shaktikanta Das said: "Price stability is the basis for high and sustainable growth. Therefore, I vote to maintain the repo rate unchanged at 6.5 percent and continue with the stance of withdrawal from accommodation."
He added: "With food inflation persistently high, it would be wise to continue with the disinflationary policy we have adopted. Any hasty action in a different direction will cause more harm than good. It is important that inflation is durably aligned with the goal of the 4.0 per cent." MPC member Dr Shashanka Bhide said: "The rise in the projected inflation rate above the 4.5 per cent mark in the second half of the financial year reflects the underlying pressures As an important part of these price pressures are related to food inflation, it is appropriate to take a vigilant approach to ensure that there are no spillover effects. the high inflation of food on the prices of other items in the consumer basket".
She added: "With aggregate output projections for 2024-25 reflecting strong GDP growth, keeping monetary policy focused on achieving the inflation target on a lasting basis is appropriate at this time."
Dr Ashima Goyal said: "India cannot be compared with the US Federal Reserve in terms of rate cuts. India cannot cut rates before the US Federal Reserve. But The US has its own special problems that do not apply elsewhere. Many other central banks are cutting rates." He added: "India's falling current account deficit, inclusion in the index and the "Improved ratings add to the many reasons that make interest differentials with the US less important. India's inflation differential with the US is also narrowing again."
Professor Jayanth R. Varma said, "he argued for a 25 basis point rate cut because professional forecasters surveyed by the RBI project that growth in both 2025-26 and 2024-25 will be lower than in 2023-24 by more of 0.75 percent, and lower than the potential growth rate (of say 8 percent) by more than 1 percent."
He added: "This is an unacceptably high growth sacrifice, considering that headline inflation is projected to be only about 0.5 per cent above target, and core inflation is extremely benign." Dr Rajiv Ranjan called for maintain the status quo and said: "Broadly speaking, we are in a similar monetary policy environment as the last two bimonthly reviews. Growth remains strong and has surprised further to the upside. While core inflation has softened even more". , food inflation risks have remained elevated.
Dr Michael Debabrata Patra said: "Food prices are dampening any consideration of possible changes in monetary policy. The speed of the decline in inflation has been disappointing so far, even from a cross-sectional perspective. Food prices food persists for too long as the main impediment to faster disinflation.
He added: "The Indian economy remains hostage to interrelated food price shocks. Their repetitive occurrence calls for intensified surveillance of monetary policy to avoid contagion effects to other components of inflation and expectations."
