InvestorQ : What were the highlights off the latest MPC minutes announced on 20 Feb? Was the focus only on inflation?
Priyanka N made post

What were the highlights off the latest MPC minutes announced on 20 Feb? Was the focus only on inflation?

Answer
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NISHA Nayak answered.
7 months ago


I will not say that the focus was only on inflation but certainly inflation is the main focus of the MPC. The minutes show a clear preference for inflation over growth as it showed a clear consensus among the 6 members (Dr. Ghate, Dr. Dua, Dr. Patra, Dr. Raj, Dr. Patra and the RBI Governor) about the need to go slow on rate cuts. It must be said that the MPC has shown a clear preference for inflation control over boosting GDP growth. That is easy to understand because inflation is the worry. At 7.59% in Jan-20, CPI inflation leaves little room for any further rate cuts. Household inflation expectations are also tilting towards the higher side. Food inflation has always been sticky and the virus scare in China could make oil prices more volatile. Inflation is already 150 basis points off the upper range (worst case scenario of 6%) allowed by the RBI and the MPC looks unlikely to cut rates till the time inflation moves below 4%. For now it looks like there could be no immediate rate cuts till inflation comes down more convincingly.