LIVE TV DownloadNews18 App
News18 English
»
2-min read

India Needs Spur to Growth Amid Low Inflation Outlook: RBI's Monetary Policy Committee

The Monetary Policy Committee was in favour of spurring growth in Asia's third-largest economy amid a soft inflation outlook on a sustained fall in food prices, the minutes of the February monetary policy meeting showed.

Reuters

Updated:February 21, 2019, 6:28 PM IST
facebookTwittergoogleskypewhatsapp
India Needs Spur to Growth Amid Low Inflation Outlook: RBI's Monetary Policy Committee
A Reserve Bank of India (RBI) logo is seen at the gate of its office in New Delhi. (Reuters/Altaf Hussain/Files)
Loading...
Mumbai: India needs to take steps to boost economic growth as the inflation outlook remains low, the Reserve Bank of India's monetary policy committee (MPC) said in minutes released on Thursday.

Most of the six-member MPC were in favour of spurring growth in Asia's third-largest economy amid a soft inflation outlook on a sustained fall in food prices, the minutes of the February monetary policy meeting showed.

The MPC delivered a surprise repo rate cut in a 4-2 split vote this month while members unanimously agreed to move the policy stance to 'neutral' from 'calibrated tightening'.

The MPC meeting was the first for RBI Governor Shaktikanta Das after the abrupt exit by his predecessor, Urjit Patel.

Patel was known for his hawkish stance on interest rates, but Das downplayed inflation concerns and hinted at more rate cuts.

"The overall food outlook remains benign and the headline inflation one-year ahead is projected to remain below the target level of 4 percent," Das said in the minutes.

"The neutral stance will provide flexibility and room to address challenges to sustained growth of the Indian economy over the coming months, as long as the inflation outlook remains benign."

Softer interest rates will be good news for Modi government which wants to boost lending and lift growth ahead of elections to be held by May.

Das, RBI Executive Director in charge of monetary policy department Michael Debabrata Patra and external members Ravindra Dholakia and Pami Dua voted in favour of a 25 basis points rate cut while another external member, Chetan Ghate, and RBI Deputy Governor Viral Acharya called for a hold.

Given that the last three interest rate moves out of five were split since the panel came into effect in October 2016, the probability of a divided MPC going ahead has gone up, analysts said.

India's January inflation fell to its lowest in 18 months at 2.19 percent, well below the RBI's medium-term target of 4 percent, led by persistent food price deflation, but core inflation stayed sticky at around 5.4 percent.

"Given the elevated level of inflation excluding food and fuel, our counterfactual exercises do not suggest any room for accommodation," Acharya wrote in the minutes.

The RBI has lowered its inflation target for April-September to 3.2-3.4 percent from the 3.8-4.2 percent seen in December and trimmed the growth forecast to 7.2-7.4 percent from its previous estimate of 7.5 percent.

The MPC also noted the global uncertainties over trade frictions, Brexit and oil prices could add to growth headwinds back home even as most central banks have moved firmly away from last year's tightening moves.

The U.S. Federal Reserve on Wednesday affirmed it would be "patient" on further interest rate rises after four in 2018, further cooling off rate hike expectations.
| Edited by: Ahona Sengupta
Read full article
Loading...
Next Story
Next Story

Also Watch

facebookTwittergoogleskypewhatsapp
Most Active
Company Price Change %Gain
Reliance 1,375.45 -0.08
Infosys 738.95 2.31
Indiabulls Hsg 732.60 4.96
Axis Bank 755.75 -0.68
HDFC 1,987.55 1.00
Company Price Change %Gain
Larsen 1,372.85 1.19
Reliance 1,375.60 0.03
SpiceJet 91.65 16.38
Infosys 738.50 2.36
ICICI Bank 393.00 -1.29
Top Gainers
Company Price Change %Gain
Indiabulls Hsg 732.60 4.96
Hindalco 207.15 2.37
Infosys 738.95 2.31
Wipro 261.55 1.59
Dr Reddys Labs 2,751.65 1.59
Company Price Change %Gain
Infosys 738.50 2.36
HDFC Bank 2,299.20 1.39
Yes Bank 252.15 1.27
Larsen 1,372.85 1.19
Sun Pharma 474.35 1.07
Top Losers
Company Price Change %Gain
HPCL 275.10 -5.38
Zee Entertain 443.20 -4.84
BPCL 389.15 -4.57
NTPC 129.25 -4.19
ONGC 151.85 -3.28
Company Price Change %Gain
NTPC 129.30 -4.29
ONGC 151.85 -3.28
Coal India 237.20 -2.43
Tata Steel 513.55 -2.41
Maruti Suzuki 6,680.80 -2.22

Live TV

Loading...
Countdown To Elections Results
  • 01 d
  • 12 h
  • 38 m
  • 09 s
To Assembly Elections 2018 Results