The Reserve Bank of India (RBI) has released the minutes of its Monetary Policy Committee (MPC) meeting held in April, 2023. This time when RBI Governor Shaktikanta Das announced a pause in the repo rate hike and retained it at 6.50 per cent, it surprised many. Now, with the release of RBI MPC minutes, it is clear that the central bank’s governor has also talked about global uncertainty and the risks faced by banks across the world.
Apart from pausing the repo rate hike, the RBI MPC also kept the liquidity adjustment facility (LAF) unchanged at 6.50 per cent, the standing deposit facility (SDF) unchanged at 6.25 per cent and the marginal standing facility (MSF) and the Bank Rate, also unchanged at 6.75 per cent.
However, in the MPC minutes, the RBI Governor Das has asserted that the fight with inflation is far from over. Here are the key takeaways from the recently released RBI MPC minutes.
RBI MPC Minutes – Key Highlights
- Some members of the MPC – Dr. Shashanka Bhide, Dr. Ashima Goyal, Dr. Rajiv Ranjan, Dr. Michael Patra and Guv Shaktikanta Das voted to retain RBI MPC’s stance on withdrawal of accommodation in order to ensure that inflation aligns with the target while supporting growth. However, one of the members did not express confidence on the same.
- When it comes to the global economic downturn, Dr Shashanka Bhide highlighted the problems in the macroeconomic landscape and how a fall in demand was causing uncertainty in financial and energy markets.
- MPC member Jayanth R. Verma also noted that there is a likelihood of inflation increasing under the impact of OPEC oil cut and poor rainfall this season. However, it was also acknowledged that the accurate data for monsoon would only be available till June. The member said, “The MPC needs to keep a careful watch on this evolving situation. If crude were to creep towards the triple digit mark, there might be a need for a monetary response.”
- As far as the inflation goes, Dr Patra noted that in the wake of better momentum of economic activity in India, there are some indications of a strong demand pressure. He said, “By current reckoning, the future path of inflation is vulnerable to several supply shocks. The MPC must accordingly remain on high alert and ready to act pre-emptively if risks intensify to both sides of its commitment: price stability and growth.”
- However, Dr. Rajiv Ranjan acknowledged that on the domestic front, the Indian economy is showing visible signs of easing inflation, robust domestic growth and relative insulation from the global banking crisis.