Four out of seven TAC members recommended RBI to cut repo rate on 04 August Policy Review

Three members recommended a status quo

Consultation with external Members of the Technical Advisory Committee (TAC) on Monetary Policy was held electronically between July 22 and 28, 2015 in the run up to the Third Bi-monthly Monetary Policy Review, 2015-16 on 04 August 2015. The main points suggested by Members are set out below.

* Normalization of the US Fed policy stance would be sooner and gradual, rather than later and more rapid, suggesting a Fed fund rate hike in September or December.

* On Greece, Greek exit cannot be ruled out in the future.

* Domestic economy continues to be weak. Source of sustained growth will depend on how the policy framework evolves.

* Core inflation is likely to stay around the 5.5% range this year, and may further dip in the near term because of lower petrol prices.

* Members found growing weakness on trade account as a serious medium-term risk to financial stability and economic performance. Downward adjustment of the nominal rupee exchange rate could encourage exports

* Four out of seven members recommended a reduction in the policy repo.

* Three Members recommended a status quo.

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