For the first time one member differed on RBI policy rate decision

MUMBAI: For the first time in its five meetings one of the members of the monetary policy committee ( MPS) differed from the majority view on the policy rate.

The central bank kept the repo rate unchanged at 6.25%It also estimates inflation at 4.5% in the first half of FY’18 and 5% in the second half of FY’18. Headline inflation is projected in the range of 2.0-3.5 per cent in the first half of the year and 3.5-4.5 per cent in the second half.

Of the six members, both external and internal, one external member Ravindra Dholakia was not in favour of a pause in policy rate. While the other five members voted in favour of a pause in bench mark policy rate- the repo rate, the rate at which it lends to banks.

With the softening of global crude oils prices and slowdown in Q4’17 growth numbers, several economists expected that the Reserve Bank would soften its monetary policy stance from neutral to accommodative paving the way for a rate cut in the near future.

In the four meetings ever since the Reserve Bank of India moved to a system of monetary policy committee (MPC) in fixing monetary policy target in September, 2016, all the members – three internal and three external members have voted in unison opting for a pause in benchmark repo rate, leaving no room for any debate within.

The RBI’s MPC has three internal members, the governor, the deputy governor in charge of monetary policy and the executive director in charge of monetary policy. External members are Chetan Ghate, a professor at Indian Statistical Institute; Pami Dua, director at Delhi School of Economics (DSE); and Ravindra Dholakia, professor at Indian Institute of Management, Ahmedabad, as MPC members.

The minutes of the MPC’s meeting will be published June 21, 2017 and the MPC meets next on August 1 and 2, 2017.