RBI monetary policy review: MPC begins 2-day meet to decide key interest rate

Zee Media Bureau

New Delhi: The newly-constituted Monetary Policy Committee (MPC) headed by RBI Governor Urjit Patel is unlikely to lower rates at its maiden policy review on Tuesday as it awaits more supporting data on inflation.

The monetary policy review on October 4 will be the first by the six-member MPC as well as Governor Patel, who as the deputy governor had described the RBI as an owl when it comes to inflation management.

August retail inflation eased to a five-month low of 5.05 per cent but WPI inflation climbed to a two-year high of 3.74 percent. Before the dip in August, both the retail as well as wholesale price indices were on a continuous upward spiral. The government had in August notified 4 percent inflation target with a range of plus/minus 2 percent for the next five years under the monetary policy framework agreement with the Reserve Bank.

MPC has three members each from the government and the Reserve Bank.

The government nominees are Chetan Ghate, professor at the Indian Statistical Institute; Pami Dua, Director, Delhi School of Economics and Ravindra H Dholakia, professor at IIM-Ahmedabad, while RBI nominees are the Governor, Deputy Governor in-charge of monetary policy R Gandhi and Executive Director Michael Patra. For the upcoming monetary policy announcement, the RBI has rescheduled the timing to mid-afternoon against the usual 1100 hrs.

If the six-member panel is divided on rate decision, the Governor can use his veto power to take a final call on the policy rates.

With PTI Inputs