RBI Monetary Policy Committee minutes: Members differ on policy stance

The Reserve Bank of India has released the minutes of the recent RBI Monetary Policy Committee meeting during which the repo rates were left unchanged and the stance of withdrawal of accommodation was maintained.

The minutes reveal the individual views of each of the MPC members. While the vote to remain status-quo on the repo rate was unanimous, there were some differing views that were voiced.

RBI Governor Shaktikanta Das has made it clear that the battle against inflation is not yet won. “Our job is only half done”, he says.

Dr. Shashanka Bhide highlights the upside risks to inflation, he says that it is necessary to ensure that the policy framework is focused on achieving the inflation target while supporting growth.

Dr Ashima Goyal said, “As expected inflation falls, however, it is important that real repo rate does not rise too high”. While voting for the present stance to continue, Dr Goyal explained that it was not possible to give a signal about future action.

Dr Jayant Varma however, was of an opposing view on the stance. Mincing no words, he says the stance is becoming more and more disconnected from reality. “The monetary policy is now dangerously close to levels at which it can inflict significant damage to the economy”, he adds.

Dr Rajiv Ranjan, while pointing out that the actions taken so far are working in the right direction, says “It needs to be acknowledged, however, that knowing when to stop is hard”. He also adds that its time “to emphasise the distinction between the inflation target and tolerance of deviations from the target”.

Dr. Michael Debabrata Patra also highlighted the upside risks to inflation. He says "Holding the rate unchanged should not be interpreted as the interest rate cycle having peaked, but as a period of careful evaluation of a decision on the extent of additional policy tightening, if needed."