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RBI MPC Minutes: The Reserve Bank has revealed the details of the MPC meeting held earlier this month. The Governor said that most of the MPC members had voted in favor of reducing the repo rate.
New Delhi. Reserve Bank of India (RBI) Governor Sanjay Malhotra has made public the details of the Monetary Policy Committee (MPC) meeting held earlier this month. After the MPC meeting, while supporting the decisions to cut the repo rate, he had said that the neutral stance of monetary policy would be helpful in taking the decision. In the MPC meeting of RBI this month also a cut of 0.25 percent was made. The RBI Governor said that the neutral stance of monetary policy will give the central bank the flexibility to take decisions in accordance with the changing macro-economic conditions.
Malhotra made this comment during the MPC meeting held from December 3 to 5. RBI released the details of this meeting in which the decision to cut the rate by 0.25 percent was released on Friday. According to this statement, Malhotra said that I vote in favor of 0.25 percent rate cut. This will boost demand and support growth. Maintaining a neutral stance will provide the flexibility needed for a data-driven policy.
How much will inflation be in future?
He also estimated core inflation to be around 4 percent in the first half of the next financial year. He said that except for precious metals, inflation is likely to remain even lower. In the MPC meeting, Deputy Governor Poonam Gupta said that the faster than expected decline in retail inflation is important from the monetary policy point of view. He clarified that the current rate cut and the overall rate cut of 1.25 per cent this year shows no signs of unsustainably fast growth (overheating) in economic activity.
What answer did the MPC members give?
RBI Executive Director Indranil Bhattacharya, while mentioning that retail inflation has come down to 0.3 percent in the meeting, said that the reduction in inflation by about 1.80 percent in September-October is mainly the result of fall in the prices of food items. Three independent members of the MPC – Ram Singh (Delhi School of Economics), economist Saugata Bhattacharya (Mumbai) and Nagesh Kumar (Industrial Development Studies Institute, New Delhi) were also present in the meeting. Ram Singh said that after October 2025, the data has given additional policy scope to support the pace of growth. He also suggested ‘liberalizing’ the policy stance with a cut in the repo rate.
Who voted to reduce repo?
Saugata Bhattacharya said that the overall rate cut and increase in cash flow have balanced the direction of monetary policy. Voting in favor of reducing the repo rate to 5.25 percent, he said that future action will depend on the data. In the meeting, Nagesh Kumar said that geopolitical and trade related uncertainties are beginning to show signs of impacting business sentiments. In particular, the high tariffs imposed by the US have particularly affected labour-intensive industries like textiles, leather goods, jewelery and processed food products. In this meeting, the MPC decided that any future policy step would be taken on the basis of complete data only, so that the balance of both economic stability and growth is maintained.
