Tuesday, October 6, 2020

India to announce delayed policy decision on Oct. 9

     India's central bank will announce the results of its delayed monetary policy review on Friday, Oct. 9 after the government on Monday appointed three new external members to the Reserve Bank of India's (RBI) monetary policy committee (MPC).
     On Sept. 28 RBI rescheduled its policy meeting that was planned to conclude on Oct. 1 to a future date, but without any explanation for the delay.
     Today RBI announced this review would now take place from Oct. 7 to Oct. 9 after the government on Monday appointed economist Ashima Goyal, Jayanth R. Varma and Shashanka Bhide as members of the central bank's MPC.
     RBI's first monetary policy committee was constituted by the government in September 2016 and the committee held its inaugural meetings on Oct. 3 and Oct. 4 that year. 
     The creation of the MPC came after India's government reshuffled the central bank's monetary policy framework as part of its adoption of inflation targeting.
     Prior to 2016 the governor of the RBI had been solely responsible for taking monetary policy decisions under the advice the bank's technical advisory committee. Since then policy decisions have been taken by the MPC.
      The MPC comprises six members, with three from RBI, including the bank's governor, the deputy governor in charge of monetary policy and an officer of RBI nominated by the bank's central board of directors.
     The other three MPC members are appointed by the government for terms of four years.
     RBI, which targets inflation of 4.0 percent, plus/minus 2 percentage points, is expected to keep its rates on hold for the rest of this year as its balances above-target inflation amid recession.
      RBI has cut its policy rate twice this year by a total of 115 basis points to 4.0 percent following cuts in March and May. 
      Since then the rate has been kept steady, including at its last meeting in early August when it also decided to continue with "an accommodative stance as long as it is necessary to revive growth and mitigate the impact of COVID-19 on the economy while ensuring that inflation remains within the target going forward."
     India's inflation rate eased slightly to 6.69 percent in August from 6.73 percent in July but has remained above RBI's upper limit since April. 
     In August RBI said it expected inflation to remain elevated in the second quarter of the current 2020-21 fiscal year, which began April 1, before moderating in the second half of 2020-21.
     India's gross domestic product shrank a worse-than-expected 23.9 percent year-on-year in the first quarter of 2020-21, and RBI expects growth for the full year to be negative.


Post a Comment