The monetary policy committee (MPC) kept the policy repo rate unchanged at 5.15 per cent, continuing with the accommodative stance to revive growth
Going forward, the inflation outlook is likely to be influenced by several factors like food inflation, crude prices and input costs for services, RBI said
Following the November print of 5.54%, RBI had sprung a surprise and opted to hold the repo rate at 5.15 per cent. It, however, continued with the accommodative stance as long as it was necessary.
The retail inflation that for several months remained in the comfort zone of the central bank has started inching up and crossed the 7 per cent mark during December 2019
A rate cut or even a hike can happen, if at all, in the second half of the next financial year
The government had in 2016 constituted MPC to set the benchmark interest rate
Patra will be part of the six-member monetary policy committee (MPC) as a deputy governor, and so will be Raj as an ED of the department. Raj would be part of MPC as an internal RBI member
But MPC has reasons to not ignore headline inflation
All these departments, in the past six months, were being managed by the three deputy governors
The government will have to listen to the RBI's plea for supportive fiscal policy measures
Maintain balance between growth and financial stability
The six-member MPC, headed by Das, had kept the repo rate unchanged on December 5 despite moderation in economic growth and easing inflation
Sachin Chaturvedi, a member of the Central Board of RBI, describes Das as a person who brings in pragmatism, commitment, transparency and sincerity to the table.
The market and economists were expecting a sure cut in the policy review, considering the weak growth rate
RBI's next move will depend on the Budget
All these analysts agree that a rate cut is on the table but are not the same page on the timing though
'We expect a gradual recovery in income growth right into the second half of next year', said Das
Says forces driving up inflation 'appear to be transient'
In the absence of near-term government stimulus, markets may remain range-bound until Budget
With the RBI's rate-setting meeting over, the attention now turns to the US Federal Reserve's (US Fed's) two-day policy meet that begins on December 11