InvestorQ : Was there anything specific of note in the minutes of the Monetary Policy Committee announced by the RBI on 22 February?
Rutuja Nigam made post

Was there anything specific of note in the minutes of the Monetary Policy Committee announced by the RBI on 22 February?

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2 months ago
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The MPC minutes are normally announced exactly 14 days after the monetary policy announced. Ideally, this should have been published on 19 February but being a holiday in the financial markets, the RBI has published these minutes on 22 Feb. These minutes highlight the gist of the deliberations among the 6 members of the MPC, including the RBI governor, and how the debate was carried to arrive at the policy stance.

The consensus view of the members of the MPC as outlined in the minutes was to continue with low rates as well as an accommodative monetary stance for now and also well into the future. However, MPC members Dr Mridul Saggar of the RBI have cautioned that price stability role of the RBI cannot be ignored for too long. That means, the RBI will have to intervene at some point in the future if inflation gets out of control.

The MPC was impressed by the fact that high frequency data points like GST collections, railway freight collections, cement offtake etc were positive even as inflation was gradually tapering to lower levels. Shaktikanta Das, the RBI governor, did not have to cast any deciding vote due to the consensus already built. However, he underlined that supporting growth recovery remained the first priority of the RBI till there was clear evidence.

An interesting sidelight, as always, came from Jayant Varma, who is a professor at IIM Ahmedabad and also the former ED and Chairman of SEBI. Varma has suggested sticking to a data driven approach on rates and stance. What he meant was that the MPC should avoid giving any medium-term guidance on rates or the accommodative stance. Instead, it should only be driven by the live data as and when it flowed in. 

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