RBI policy panel turns less hawkish

The Reserve Bank of India’s monetary policy committee welcomed data showing inflation easing below its target, but wanted more assurance the trend would continue before deciding whether to lower interest rates, minutes from its last meeting showed on Wednesday.

The RBI voted 5-1 to keep the repo rate at 6.25% earlier this month, but issued a slightly less hawkish statement after consumer inflation eased to 2.99% in April, below its 4% target.

Ravindra H Dholakia, a professor who is one of three nonRBI members, was the lone dissenter, voting to lower the repo rate by 50 basis points by arguing that inflation had eased enough to justify a rate cut.

The vote marked the first nonunanimous decision in the five meetings since the MPC was formed last September.

However, the rest of the panel members, including governor Urjit Patel, wanted more evidence that inflation would ease, while expressing concern that consumer prices would accelerate later this year.

Data after the RBI’s June 6-7 policy meeting showed inflation easing further to 2.18% in May from a year earlier, the lowest in at least five years.

India will post one more inflation data next month before the RBI’s next policy meeting on August 1-2.

Meanwhile, the Sensex posted small losses for a second consecutive session on Wednesday, tracking lower Asian markets after oil prices slumped, with investors waiting for the minutes of a central bank policy meeting held earlier this month.

The Nifty closed down 0.21% at 9,633.60, while the Sensex ended 0.04% lower at 31,283.64.