MPC turns less hawkish, awaits data, reveal RBI minutes

Govt will post one more inflation data next month before RBI's next policy meeting on August 1-2

The Reserve Bank of India's monetary policy committee welcomed data showing inflation easing below its target but wanted more assurance the trend would continue before deciding whether to lower interest rates, minutes from its last meeting showed on Wednesday.

The RBI voted 5-1 to keep the repo rate at 6.25 per cent earlier this month, but issued a slightly less hawkish statement after consumer inflation eased to 2.99 per cent in April, below its 4 per cent target.

Ravindra H. Dholakia, a professor who is one of three non-RBI members, was the lone dissenter, voting to lower the repo rate by 50 basis points by arguing that inflation had eased enough to justify a rate cut.

The vote marked the first non-unanimous decision in the five meetings since the MPC was formed last September.

However, the rest of the panel members, including Governor Urjit Patel, wanted more evidence that inflation would ease, while expressing concern that consumer prices would accelerate later this year.

Data after the RBI's June 6-7 policy meeting showed inflation easing further to 2.18 per cent in May from a year earlier, the lowest in at least five years.

India will post one more inflation data next month before the RBI's next policy meeting on August 1-2.