SME Times News Bureau | 19 Oct, 2019
Minutes of the central bank’s monetary policy
committee (MPC) meeting released on Friday indicated RBI Governor Shaktikanta Das
hinting at further rate cuts.
Das said "there is policy space to address
growth concerns", according to the minutes of the MPC meeting released on
In 2019, the Reserve Bank of India (RBI) has delivered 135 basis points (bps)
of cuts in its key lending rate.
Das, according to the minutes, saw domestic demand moderating significantly.
"As the inflation scenario remains benign with headline inflation
projected at below target in the remaining period of 2019-20 and in Q1:2020-21,
there is policy space to address growth concerns," Das said.
"The weakening of private consumption, which, for long, has been the
bedrock of aggregate demand, in particular, is a matter of concern," the
Besides, a number of MPC members expressed concerns over the transmission of
rates. While Das said that "monetary transmission has remained weak"
external member Chetan Ghate said the "monetary transmission has worsened
since the last review".
Das, however, cautioned the government, saying that "there is also a need
to be watchful of the fiscal situation; however, the government has indicated
that it would maintain the fiscal deficit".
On the road ahead, MPC member Michael Debabrata Patra stressed that a full
throttle effort by all arms of macroeconomic management is the need of the
The RBI on October 5 announced a 25 basis point rate cut in its repo, or
short-term lending rate for commercial banks, to 5.15 per cent, from 5.40 per
cent, after the rate of gross domestic product (GDP) growth during the first
quarter slumped to 5 per cent.