RBI's MPC members have divergent views on the next decision on interest rates

MUMBAI: The six-member Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has divergent views on the future direction of interest rates, according to the minutes of the June 8 meeting of the MPC. Some members opined that a further increase in interest rates would slow down the pace of the country's economy.

The MPC kept the interest rate unchanged for the second consecutive meeting on June 8. However, it was indicated at the end of the meeting that the monetary policy will remain tight for some time to control the inflationary pressure.

Monetary policy is currently at a level where further tightening could prove dangerous for the economy, Jayant Verma, an outside member of the committee, was quoted as saying in the minutes.

Another member, Ashima Goyal, also maintained that the real repo rate would not increase further. Inflation has come down as expected.

The other three members of the committee spoke of staying focused on risks to a rise in inflation and reiterated that interest rate stabilization in June was limited to firm policy and that future decisions on interest rates would depend on macroeconomic data.

After the first quarter of the current fiscal year, the supply-demand gap may accelerate the pace of price hikes, Reserve Bank Deputy Governor Michael Patra said.

However, the work to bring inflation under control is half over, said Reserve Bank Governor Shaktikanta Das.