Monetary policy panel publishes minutes of its first meeting
Published: Oct 19, 2016
By TIOLCORP News Service
MUMBAI, OCT 19, 2016: THE Reserve Bank of India's Monetary Policy Committee (MPC) considered the subdued outlook on the economic front and the decline in inflation while unanimously agreeing to cut the key policy rate by 25 basis points at its last policy review on October 4. The minutes of the two day meeting on October 3-4, which was released on Tuesday, revealed all the six members of the committee envisaged a "trajectory taking headline CPI inflation towards a central tendency of 5 per cent by March 2017."
All the six members voted for a 25 basis points cut in the Repo rate. It is mandatory now to publish minutes of the committee's deliberations within 14 days of the monetary policy review including the voting pattern. According to the minutes, RBI Governor Urjit Patel said indicators of economic activity pointed to a subdued outlook, though it was gradually improving.
"Further, continuing low capacity utilisation in industry and the persistence of the output gap suggested that pricing power is likely to remain low. Importantly, high frequency data embedded in our forward-looking surveys as well as daily movements in prices of fruits and vegetables, cereals and even pulses across the country gave us some confidence that the inflation target of 5 per cent for Q4 of 2016-17 can be achieved," Patel said in his statement.
The minutes of the meeting said that the government has announced several measures to cool food inflation pressures, especially with regard to pulses.
"These measures should help in moderating the momentum of food inflation in the months ahead. This has opened up space for policy action, as indicated in the third bi-monthly monetary policy statement," it said. According to external member Chetan Ghate the persistence of core inflation remains a concern.
