You are here: Home » Finance » News » Others
Business Standard

RBI rate panel maintains hawkish stance, warns of inflation

Consumer price inflation rose by an annual 3.81 per cent in March

Reuters  |  Mumbai 

Reserve Bank of India
Reserve Bank of India

The Reserve Bank of India's (RBI's) cited upside risks to arising from price pressure excluding food and fuel as the main reason for keeping its policy rate unchanged, according to minutes of its April meeting released on Thursday.

The six-member (MPC) which had unanimously decided to keep the repo rate unchanged at 6.25 per cent in early April, had raised a secondary rate called the reverse repo rate, which is used to drain excess funds from banks.

The MPC, which aims to bring down to 4 per cent in the medium term, maintained its hawkish stance on inflation, with most members expressing concern over upside risks to core

One member, MD Patra, executive director of the RBI, and in charge of monetary policy, favoured an increase in the repo rate by 25 basis points as a pre-emptive move to curb pressures.

But, Patra finally agreed with the rest of the panel on holding the rate unchanged for now.

"There is some uncertainty as to when the headline might cross the target rate of 4 percent and keep inching above, given that without food and fuel is stubbornly above the target rate," Deputy Governor Viral Acharya wrote in the minutes.

Consumer price rose by an annual 3.81 per cent in March, the fastest pace since October 2016 with core hovering near 4.9 per cent.

Besides core inflation, a demand pick-up on a government salary increment and reflation risk from commodities globally were the key reasons that all panel members cited for voting to keep the repo rate unchanged.

A Reuters poll of 35 economists conducted from April 10-19 showed that the would keep the repo rate unchanged until October-December of 2018 and the next move would be a cut.

However, on growth, the MPC reiterated its confidence of a faster recovery given that a government ban of certain bank notes in November did not hit the economy in a major way.

India posted 7.0 per cent growth for the October-December period, much faster than an expected 6.4 percent rate, and even higher than China's 6.8 percent, leaving analysts stunned with such a sharp recovery despite the so-called demonetisation exercise.

RECOMMENDED FOR YOU

RBI rate panel maintains hawkish stance, warns of inflation

Consumer price inflation rose by an annual 3.81 per cent in March

Consumer price inflation rose by an annual 3.81 per cent in March
The Reserve Bank of India's (RBI's) cited upside risks to arising from price pressure excluding food and fuel as the main reason for keeping its policy rate unchanged, according to minutes of its April meeting released on Thursday.

The six-member (MPC) which had unanimously decided to keep the repo rate unchanged at 6.25 per cent in early April, had raised a secondary rate called the reverse repo rate, which is used to drain excess funds from banks.

The MPC, which aims to bring down to 4 per cent in the medium term, maintained its hawkish stance on inflation, with most members expressing concern over upside risks to core

One member, MD Patra, executive director of the RBI, and in charge of monetary policy, favoured an increase in the repo rate by 25 basis points as a pre-emptive move to curb pressures.

But, Patra finally agreed with the rest of the panel on holding the rate unchanged for now.

"There is some uncertainty as to when the headline might cross the target rate of 4 percent and keep inching above, given that without food and fuel is stubbornly above the target rate," Deputy Governor Viral Acharya wrote in the minutes.

Consumer price rose by an annual 3.81 per cent in March, the fastest pace since October 2016 with core hovering near 4.9 per cent.

Besides core inflation, a demand pick-up on a government salary increment and reflation risk from commodities globally were the key reasons that all panel members cited for voting to keep the repo rate unchanged.

A Reuters poll of 35 economists conducted from April 10-19 showed that the would keep the repo rate unchanged until October-December of 2018 and the next move would be a cut.

However, on growth, the MPC reiterated its confidence of a faster recovery given that a government ban of certain bank notes in November did not hit the economy in a major way.

India posted 7.0 per cent growth for the October-December period, much faster than an expected 6.4 percent rate, and even higher than China's 6.8 percent, leaving analysts stunned with such a sharp recovery despite the so-called demonetisation exercise.



image
Business Standard
177 22

RBI rate panel maintains hawkish stance, warns of inflation

Consumer price inflation rose by an annual 3.81 per cent in March

The Reserve Bank of India's (RBI's) cited upside risks to arising from price pressure excluding food and fuel as the main reason for keeping its policy rate unchanged, according to minutes of its April meeting released on Thursday.

The six-member (MPC) which had unanimously decided to keep the repo rate unchanged at 6.25 per cent in early April, had raised a secondary rate called the reverse repo rate, which is used to drain excess funds from banks.

The MPC, which aims to bring down to 4 per cent in the medium term, maintained its hawkish stance on inflation, with most members expressing concern over upside risks to core

One member, MD Patra, executive director of the RBI, and in charge of monetary policy, favoured an increase in the repo rate by 25 basis points as a pre-emptive move to curb pressures.

But, Patra finally agreed with the rest of the panel on holding the rate unchanged for now.

"There is some uncertainty as to when the headline might cross the target rate of 4 percent and keep inching above, given that without food and fuel is stubbornly above the target rate," Deputy Governor Viral Acharya wrote in the minutes.

Consumer price rose by an annual 3.81 per cent in March, the fastest pace since October 2016 with core hovering near 4.9 per cent.

Besides core inflation, a demand pick-up on a government salary increment and reflation risk from commodities globally were the key reasons that all panel members cited for voting to keep the repo rate unchanged.

A Reuters poll of 35 economists conducted from April 10-19 showed that the would keep the repo rate unchanged until October-December of 2018 and the next move would be a cut.

However, on growth, the MPC reiterated its confidence of a faster recovery given that a government ban of certain bank notes in November did not hit the economy in a major way.

India posted 7.0 per cent growth for the October-December period, much faster than an expected 6.4 percent rate, and even higher than China's 6.8 percent, leaving analysts stunned with such a sharp recovery despite the so-called demonetisation exercise.



image
Business Standard
177 22