All MPC Members voted to keep rates unchanged: Miniutes of December MPC meeting

Urjit Patel says space would open for policy action in due course if upside risks not materialises on a durable basis

The Reserve Bank of India has released the the minutes of the monetary policy committee (MPC) meeting on 3-5 December 2018. All the members of MPC voted unanimously for holding policy rate repo rate unchanged. Meanwhile, five out of six members also voted for maintaining the policy stance as calibrated tightening.

Dr. Chetan Ghate voted to keep the policy rate unchanged and maintaining stance as calibrated tightening both the inflation and growth numbers having developed "soft-spots" and he believed the appropriate risk-management approach at the current juncture would be to "wait and watch."

Dr. Pami Dua also voted for maintaining the stance of calibrated tightening, citing upside risks to inflation and suggest It is best to pause and wait for incoming data while maintaining a vigil on inflation, especially with respect to food and crude oil.

Dr. Ravindra H. Dholakia voted for status quo on repo rate, while commented that retaining the stance of calibrated tightening seems totally inconsistent and unjustified with the inflationary expectation in the country as a whole one year ahead seems to be declining and not remaining the same.

Dr. Michael Debabrata Patra voted for status quo on the policy repo rate and for maintaining the stance of calibrated tightening.

Dr. Viral V. Acharya commented that given the relatively short period of time over which inflation has softened, it is important to wait and watch, i.e., remain data-dependent as well as reliant on clear understanding of the drivers of recent data.

Dr. Urjit R. Patel said that although the inflation trajectory has been revised downwards, several uncertainties persist, especially about the medium-term outlook of food inflation and oil prices. Incoming data should help clear the haziness and enable better assessment of the inflation outlook, especially regarding the permanence of the current softness in inflation prints. However, he highlighted that if upside risks, not materialises on a durable basis in the coming months, there is possibility of space opening up for policy action in due course.

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