{"id":87685,"date":"2018-08-17T08:41:11","date_gmt":"2018-08-17T08:41:11","guid":{"rendered":"http:\/\/www.bnreport.com\/mpc-cites-inflation-risks-as-trigger-for-rbis-move-to-hike-the-repo-rate\/"},"modified":"2018-08-17T08:41:11","modified_gmt":"2018-08-17T08:41:11","slug":"mpc-cites-inflation-risks-as-trigger-for-rbis-move-to-hike-the-repo-rate","status":"publish","type":"post","link":"https:\/\/www.bnreport.com\/en\/mpc-cites-inflation-risks-as-trigger-for-rbis-move-to-hike-the-repo-rate\/","title":{"rendered":"MPC cites inflation risks as trigger for RBIs move to hike the repo rate"},"content":{"rendered":"

Mumbai: The governments higher support prices for farm products drove five of the six members of the Monetary Policy Committee<\/a> to vote for an increase in interest rate for the second time in a row, but RBI<\/a> governor Urjit Patel<\/a> and his deputies were for maintaining the neutral stance, which would provide room to twist policy in either direction. <\/p>\n

Vulnerabilities arising from global financial markets continue to impart uncertainty to the inflation<\/a> outlook, according to the minutes of the last MPC meeting. <\/p>\n

\u201cIn view of several uncertainties that are present, I maintain the neutral stance of monetary policy,\u201d Patel said. \u201cAs inflation risks have continued to be elevated, I vote for an increase in the policy repo rate<\/a> by 25 basis points. This action is a necessary step towards securing the mandated 4 per cent inflation target on a durable basis.\u201d <\/p>\n

The committee was not comfortable as inflation drifted away from the 4 per cent target. \u201cMuch work lies ahead in making monetary policy more credible and anchoring inflationary expectations,\u201d MPC member Chetan Ghate said. <\/p>\n

He said higher MSPs have the potential of pushing headline inflation sustainably and significantly beyond the 4 per cent target. \u201cWhile the final inflationary impact will depend on the exact procurement policy, which is yet to be announced, given the magnitude of the MSP surprise, it is opportune to frontload a rate hike,\u201d Ghate said. <\/p>\n

Even as inflation projections for Q2 have been revised marginally downwards against the June statement, projections for Q3 onwards remain broadly unchanged as several upside risks persist. For example, the geopolitical tensions and supply disruptions remain an upside risk to oil prices and volatility in global financial markets continues to impart uncertainty to the inflation outlook. <\/p>\n

The fall in global demand due to intensification of protectionist trade policies could pull down oil prices. <\/p>\n

Pami Dua said fiscal slippages by governments may have adverse implications for market volatility, and may crowd out private investment and impact the outlook for inflation. <\/p>\n

Ravindra H Dholakia voted for status quo arguing that real policy rate is very high compared to most other countries and is adversely impacting capital formation. <\/p>\n

Deputy governor Viral Acharya<\/a> argued that two consecutive rate hikes would help rein in demand pressures and manage inflation expectations. \u201cThis transmission will occur with a lag. Since that is somewhat far and there is an important interim uncertainty in the form of tariff wars, which can rock global growth, financial markets and inflation in abrupt and unexpected ways, I vote to retain the neutral stance of monetary policy,\u201d he said. <\/p>\n

The households inflation expectations, as measured by RBIs survey, have risen significantly in the last two rounds, which could influence actual inflation outcomes in the months to come, the minutes said. <\/p>\n

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Mumbai: The governments higher support prices for farm produ..<\/p>\n","protected":false},"author":1,"featured_media":87686,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[202],"tags":[],"class_list":["post-87685","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nMPC cites inflation risks as trigger for RBIs move to hike the repo rate - Business News Report<\/title>\n<meta name=\"description\" content=\"Mumbai: The governments higher support prices for farm produ..\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bnreport.com\/en\/mpc-cites-inflation-risks-as-trigger-for-rbis-move-to-hike-the-repo-rate\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"MPC cites inflation risks as trigger for RBIs move to hike the repo rate - 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