Neutral stance,RBI hints at end to rate tightening

MPC minutes: Risks to inflation, fiscal uncertainty to keep RBI alert :Patel

India News

Risks to inflation due to the rise in oil prices, uncertainties on the fiscal and external front will keep the central bank vigilant, said the Reserve Bank of India (RBI) Governor Urjit Patel in the minutes of the fifth bi-monthly and 7th meeting of the Monetary Policy Committee (MPC).The MPC met on December 5 and 6 to announce status quo in the key policy repo rate at 6 percent.Of the six members of MPC, only one member – Ravindra H Dholakia, a government nominee – voted for a policy rate reduction of 25 basis points (bps).Other members — Chetan Ghate, Pami Dua, Michael Debabrata Patra, Viral V. Acharya and Urjit R Patel were in favour of the monetary policy decision.Patel, who heads the committee, said, “The macroeconomic situation has remained broadly unchanged since the last MPC meeting in October 2017. However, the recent upturn in crude oil prices has emerged as a source of concern.”“Several uncertainties, especially on the fiscal and external fronts, persist. It is, therefore, important to be vigilant. Hence, I vote for status quo,” he said.Patel pointed out “several risks to the projected inflation trajectory” – 1. Inflation expectations of households for both three-month ahead and one-year ahead periods in the latest round of the Reserve Bank’s survey moved up, 2. Rising input cost pressures for both manufacturing and services raising risks of pass-through on output prices and 3. Fiscal slippage concerns still linger on.