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Monetary Policy Committee eyed growth concerns; took solace in low inflation - minutes

Reuters  |  MUMBAI 

By Suvashree Choudhury

(Reuters) - The of the Indian central bank's maiden monetary policy committee (MPC) meeting, released on Tuesday, showed that broad concerns over economic growth and relief from the pullback in spurred the bank's recent rate cut decision.

The from the 2-day meeting on October 3-4, which saw all six MPC members voting for a quarter point rate cut to 6.25 percent also revealed all members expecting to be in line with Reserve Bank of India's March-end target of 5 percent.

India's consumer price index cooled to a 13-month low in September to 4.31 percent, on the back of a moderation in food prices. The pullback in has raised hopes of another rate cut in the next policy review in December.

All the members agreed on the need to boost growth at the current juncture with excess capacity in the economy and softening food prices unlikely to pose much risk to inflation.

The Reserve Bank of India's monetary policy committee has three members from the central bank and three external members appointed by the government with the governor having a tie-break vote. This was the first time the rate decision was taken by the MPC, where in the past the governor of the central bank was the sole arbiter.

However, the made no mention of yearly targets beyond March 2017 and laid down the broad 2-6 percent band over the next five years. The also did not give much insight on the MPC's monetary policy stance beyond March 2017.

FAST-GROWING ECONOMY

The reiterated the surprise change in RBI's stance from a neutral tone to a more accommodative one which had prompted analysts to bring forward their expectations of rate cuts with most estimating another quarter point cut by March-end, according to a Reuters poll.

While governor Urjit Patel was brief in his views and expressed confidence in achieving the RBI's March-end target, Executive Director M D Patra highlighted the need to remain vigilant once starts moving up in the January-March quarter.

The MPC has been given a mandate of "maintaining price stability," but it must do so "while keeping in mind the objective of growth," according to the amended RBI Act.

External member Chetan Ghate, a professor at the who has also worked closely with RBI in an advisory capacity expressed his concern on a persistent core which has been hovering around 4.5 percent for several months.

However, the other two external members - Pami Dua, a director at the Delhi School of Economics and Ravindra Dholakia, a professor at the Indian Institute of Management in Ahmedabad as well as RBI Deputy Governor in charge of monetary policy R Gandhi did not express much concern over and gave greater focus to the need to boost growth.

Indian growth slowed to 7.3 percent in April-June annually and slower than the central bank's projection of 7.6 percent, though that still places among the world's fastest-growing economies.

(Reporting by Suvashree Dey Choudhury; Editing by Euan Rocha)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Monetary Policy Committee eyed growth concerns; took solace in low inflation - minutes

MUMBAI (Reuters) - The minutes of the Indian central bank's maiden monetary policy committee (MPC) meeting, released on Tuesday, showed that broad concerns over economic growth and relief from the pullback in inflation spurred the bank's recent rate cut decision.

By Suvashree Choudhury

(Reuters) - The of the Indian central bank's maiden monetary policy committee (MPC) meeting, released on Tuesday, showed that broad concerns over economic growth and relief from the pullback in spurred the bank's recent rate cut decision.

The from the 2-day meeting on October 3-4, which saw all six MPC members voting for a quarter point rate cut to 6.25 percent also revealed all members expecting to be in line with Reserve Bank of India's March-end target of 5 percent.

India's consumer price index cooled to a 13-month low in September to 4.31 percent, on the back of a moderation in food prices. The pullback in has raised hopes of another rate cut in the next policy review in December.

All the members agreed on the need to boost growth at the current juncture with excess capacity in the economy and softening food prices unlikely to pose much risk to inflation.

The Reserve Bank of India's monetary policy committee has three members from the central bank and three external members appointed by the government with the governor having a tie-break vote. This was the first time the rate decision was taken by the MPC, where in the past the governor of the central bank was the sole arbiter.

However, the made no mention of yearly targets beyond March 2017 and laid down the broad 2-6 percent band over the next five years. The also did not give much insight on the MPC's monetary policy stance beyond March 2017.

FAST-GROWING ECONOMY

The reiterated the surprise change in RBI's stance from a neutral tone to a more accommodative one which had prompted analysts to bring forward their expectations of rate cuts with most estimating another quarter point cut by March-end, according to a Reuters poll.

While governor Urjit Patel was brief in his views and expressed confidence in achieving the RBI's March-end target, Executive Director M D Patra highlighted the need to remain vigilant once starts moving up in the January-March quarter.

The MPC has been given a mandate of "maintaining price stability," but it must do so "while keeping in mind the objective of growth," according to the amended RBI Act.

External member Chetan Ghate, a professor at the who has also worked closely with RBI in an advisory capacity expressed his concern on a persistent core which has been hovering around 4.5 percent for several months.

However, the other two external members - Pami Dua, a director at the Delhi School of Economics and Ravindra Dholakia, a professor at the Indian Institute of Management in Ahmedabad as well as RBI Deputy Governor in charge of monetary policy R Gandhi did not express much concern over and gave greater focus to the need to boost growth.

Indian growth slowed to 7.3 percent in April-June annually and slower than the central bank's projection of 7.6 percent, though that still places among the world's fastest-growing economies.

(Reporting by Suvashree Dey Choudhury; Editing by Euan Rocha)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Monetary Policy Committee eyed growth concerns; took solace in low inflation - minutes

By Suvashree Choudhury

(Reuters) - The of the Indian central bank's maiden monetary policy committee (MPC) meeting, released on Tuesday, showed that broad concerns over economic growth and relief from the pullback in spurred the bank's recent rate cut decision.

The from the 2-day meeting on October 3-4, which saw all six MPC members voting for a quarter point rate cut to 6.25 percent also revealed all members expecting to be in line with Reserve Bank of India's March-end target of 5 percent.

India's consumer price index cooled to a 13-month low in September to 4.31 percent, on the back of a moderation in food prices. The pullback in has raised hopes of another rate cut in the next policy review in December.

All the members agreed on the need to boost growth at the current juncture with excess capacity in the economy and softening food prices unlikely to pose much risk to inflation.

The Reserve Bank of India's monetary policy committee has three members from the central bank and three external members appointed by the government with the governor having a tie-break vote. This was the first time the rate decision was taken by the MPC, where in the past the governor of the central bank was the sole arbiter.

However, the made no mention of yearly targets beyond March 2017 and laid down the broad 2-6 percent band over the next five years. The also did not give much insight on the MPC's monetary policy stance beyond March 2017.

FAST-GROWING ECONOMY

The reiterated the surprise change in RBI's stance from a neutral tone to a more accommodative one which had prompted analysts to bring forward their expectations of rate cuts with most estimating another quarter point cut by March-end, according to a Reuters poll.

While governor Urjit Patel was brief in his views and expressed confidence in achieving the RBI's March-end target, Executive Director M D Patra highlighted the need to remain vigilant once starts moving up in the January-March quarter.

The MPC has been given a mandate of "maintaining price stability," but it must do so "while keeping in mind the objective of growth," according to the amended RBI Act.

External member Chetan Ghate, a professor at the who has also worked closely with RBI in an advisory capacity expressed his concern on a persistent core which has been hovering around 4.5 percent for several months.

However, the other two external members - Pami Dua, a director at the Delhi School of Economics and Ravindra Dholakia, a professor at the Indian Institute of Management in Ahmedabad as well as RBI Deputy Governor in charge of monetary policy R Gandhi did not express much concern over and gave greater focus to the need to boost growth.

Indian growth slowed to 7.3 percent in April-June annually and slower than the central bank's projection of 7.6 percent, though that still places among the world's fastest-growing economies.

(Reporting by Suvashree Dey Choudhury; Editing by Euan Rocha)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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Business Standard
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