RBI Committee cautions against inflationary pressure
Published: Dec 21, 2017
The 8th meeting of the Monetary Policy Committee (MPC), constituted u/s 45ZB of the amended Reserve Bank of India Act, 1934, was held on December 5 and 6, 2017 at the Reserve Bank of India (RBI), Mumbai. Minutes of meeting are released by RBI on Wednesday December 20, 2017. Minutes showed members of the policy panel growing increasingly concerned about inflation.The MPC voted to keep the policy rate on hold at 6 percent after inflation accelerated to a seven-month high.
Two of the members, both Reserve Bank of India officials, specifically warned that India may no longer be able to afford being accommodative on inflation, even as most members noted they were mindful about a recent slowdown in economic growth. The comments appeared to further reduce the prospects the RBI would cut interest rates. The central bank took advantage of an extraordinary period of low inflation to cut rates by a total of 200 bps from January 2015 to August this year, but has since grown increasingly worried about rising prices.
The inflation report would appear to rule out any RBI rate cuts to support an economy that may have halted a five-quarter slide by growing 6.3 percent in the three months to September, but is still expanding well short of the 8 percent needed to create enough jobs for its young workforce.