INDIA: RBI Release Minutes From December Rate-Setting Meeting

Highlights from the RBI's latest minutes release:

• Malhotra: I am in favour of retaining the neutral stance which gives the requisite flexibility to remain data-dependent and act according to the evolving macroeconomic conditions and outlook.
• Gupta: One may ask whether the current rate cut, resulting in a cumulative rate cut of 125 bps, could lead to overheating in the economy. However, not just headline and core inflation, but most other nominal indicators of the economy are prevailing at levels that indicate that the economy at this point is not showing any signs of overheating. Instead, one could interpret the data as indicating that there is slack in the economy.
• Kumar: Too low an inflation rate is not healthy for a developing country like India, suggesting a demand deficit. Against that backdrop, I would like to vote for a 25-bps cut in the repo rate to support the growth momentum, while keeping a status quo on the stance.
• Saugata Bhattacharya: I believe that the cumulative policy rate cuts and liquidity infusions will now have moved the orientation of monetary policy from mildly restrictive to balanced. Pending incoming data, I believe the policy interest rate is now consistent with macroeconomic stability.
• Singh: Given the uncertainty on the external front, it seems prudent to go for only a 25-basis-point cut at this point. Additionally, in view of the dormancy in the price momentum underlying headline CPI and CPI core, and the case for supporting growth momentum, the rate cut should be accompanied by a change in stance to “accommodative”.
• Indranil Bhattacharyya: I also support retaining the neutral stance as it preserves the flexibility to respond judiciously to the evolving situation by remaining data dependent while avoiding the pitfalls of precommitment in an uncertain environment.

Click here to see the full release.