RBI MPC minutes: What RBI Governor Shaktikanta Das and others said at the crucial meet
Reserve Bank of India (RBI) Governor Shaktikanta Das has the rapt attention of the businessworld. He has already taken steps to cut the repo rate three times in a row to boost the economy.
Reserve Bank of India (RBI) Governor Shaktikanta Das has the rapt attention of the businessworld. He has already taken steps to cut the repo rate three times in a row to boost the economy. He made a number of hard-hitting points about the situation in India as revealed by the RBI MPC minutes (June 3-6 Monetary Policy Committee). The RBI released the minutes of the meeting Thursday. Check what Governor Das and other members of the committee said - Highlights:
1. The Indian economy needs a decisive monetary policy to promote growth, said Reserve Bank of India Governor Shaktikanta Das
2. He voted for a 25 basis points (bps) rate cut along with other five members at the MPC meet earlier this month. "Keeping in view the evolving growth inflation dynamics, there is a need for decisive monetary policy action. Hence, my vote is to reduce the policy repo rate by 25 basis points," he said.
3. Das, as per the minutes, said that since the last meeting of the rate-setting panel in April 2019, greater clarity has emerged about the evolving macroeconomic situation.
4. Overall, there is clear evidence of economic activity "losing traction" with the GDP growth in the fourth quarter of the last financial year slowing to 5.8 per cent, he said.
5. Das also favoured shifting the stance of monetary policy from neutral to accommodative to send a clear signal, indicating that more measures could be taken in the near future to boost growth.
6. On his part, MPC member and RBI Deputy Governor Viral Acharya flagged some upside risks, including deficiency in monsoon and volatality in crude oil prices, to inflation.
"In spite of my dilemma, I vote - albeit with some hesitation - to frontload the policy rate cut from 6 per cent to 5.75 per cent..." the minutes quoted him as saying.
7. Another member and Executive Director Michael Debabrata Patra said the risks to the primary target of monetary policy are distinctly on the ebb. Inflation expectations, he said, are also better anchored than before.
8. Other three members of the MPC -- Ravindra H Dholakia, Pami Dua, and Chetan Ghate -- also voted in favour of reducing the key lending rate.
9. Das said interest rates on small savings are also higher than the prescribed formula.
10. The transmission of the cumulative reduction of 50 basis points in the policy repo rate in February and April 2019 to fresh rupee loans has been 21 basis points.
Governor Das added, "Going forward, the transmission is expected to improve, given the lags with which banks adjust their deposit and lending rates in response to changes in the policy rate."
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