External advisor urged RBI to cut rates by 75 bps

MUMBAI (Reuters) - Three members of a seven-person committee advising the Reserve Bank of India (RBI) on monetary policy recommended a cut in interest rates at its policy review earlier this month, with one suggesting easing by 75 basis points, according to a summary of the recommendations released on Wednesday.

The minutes showed that two members had suggested the RBI ease the key repo rate by 25 bps because of easing consumer inflation.

But one member said the RBI needed to cut rates by three-quarters of a percentage point at one stroke, saying "the economy is stagnating and is in urgent need of a monetary policy push," the minutes showed.

External members work strictly in an advisory role and their recommendations are not binding.

A rate cut of that magnitude would have been the biggest since the RBI eased monetary policy by 100 bps in a single instance in December 2008, in the midst of the global financial crisis.

The RBI instead decided to leave interest rates on hold at its policy review on Feb. 3, after unexpectedly cutting the repo rate by 25 basis points to 7.75 percent in mid-January.

(Reporting by Rafael Nam; Editing by Biju Dwarakanath)