TWO DISSENTERS AT AUGUST MPC MEET
Two members of the Monetary Policy Committee (MPC) dissented with the committee's decision to cut rates. While RBI Executive Director Michael Patra voted for status quo, IIM-Ahmedabad professor and external member of the MPC Ravindra Dholakia wanted a 50-basis point rate cut. Here is a closer look at their past views:
Status quo
Wait and watch incoming data
Near-term inflation outlook admittedly benign. Yet, in a situation in which transitory and structural factors are meshed and difficult to decouple, apparently divergent messages emanate from the few data points that are available at this stage
Without more clarity, it is possible to make policy errors that can be large and costly in the medium-term
Voted for no change in policy rate. But wanted 25 bps hike to target CPI inflation of 4%
Voted for no change and sought shift towards neutral stance
Recent sharp disinflation is transitory
Reflationary effects of remonetisation are likely being underestimated
Focus on the mandated inflation target of 4%
Policy rate unchanged and maintain an accommodative stance
Voted for a 25-basis point cut in repo rate to reduce inflation and to support growth
Reiterated his June 2017 view on reduction by 50 bps
Most opportune time for 50 basis points cut
Prevailing inflation and output conditions and prospects are such that there is enough space for a substantial rate cut of 50 basis points if not more
Prudence lies in creating space when conditions are favourable and risks are not high than waiting and losing the opportunity
The time not ripe for repo rate change as system still has surplus liquidity floating in the system
Firmly supported shift in stance from accommodative to neutral
The decline in overall CPI inflation is not reliably stable
Lending rate may move up marginally as demonetisation recedes and remonetisation sets in
Favoured keeping repo rate constant as core inflation remained sticky. Expected banks to cut rates further
Batted for a 25-basis point cut in repo rate to facilitate reduction in inflation, push for growth