1.9 C
New York
Wednesday, December 6, 2023

Highlights of the minutes of RBI’s MPC meeting of Apr 3, 5-6

Informist, Thursday, Apr 20, 2023


MUMBAI – Following are the highlights of the minutes of the Apr 3, 5-6 meeting of the Reserve Bank of India’s Monetary Policy Committee, released by the central bank today:



* Global economic environment has changed dramatically since February

* Banking crises, cut in OPEC output has clouded global outlook

* Global inflation is easing but at a tardy pace

* Central banks’ runway turning narrower, bumpy for soft landing

* Domestic, global factors to bring about disinflation

* Optimistic about rabi harvest despite recent unseasonal rains

* Prices of edible oils have moderated

* Input costs lower due to softer global commodity prices

* Softer global commodity prices may soften core inflation

* Domestic growth impulses remained buoyant in Jan-Mar

* Uncertainty in crude oil prices warrants close monitoring

* Drag from net external demand is moderating

* Govt’s push on infrastructure spend to support investment activity

* Cumulative impact of past policy steps still unfolding

* Disinflation towards target likely to be slow, protracted

* Inflation for FY24 projected to soften

* Have to persevere towards durable moderation in inflation

* Our fight against inflation is far from over

* Aim to bring inflation closer to target over medium term



* Bank credit growth shows pass-through of past policy moves

* Future path of inflation vulnerable to supply shocks

* India economy momentum broadening, slack being pulled in

* Inflation above 6% inimically harmful for growth

* Inflation remains high, biggest risk to economic outlook

* Process to get CPI back to target to be gradual, uneven

* Stance of policy has to remain disinflationary

* Stance of policy must be resolute to meet 4% CPI target

* Demand pressures remain strong for contact-intensive services



* Still important to assess full impact of past rate hikes

* Recent challenges raise questions about policy conduct

* Crosscurrents of uncertainty continue to sweep the globe

* Virtuous guide to policymaking is to tread cautiously

* Aptly poised to pause in backdrop of frontloaded hikes

* Policy finely calibrated to domestic, global scenarios

* Some clear positive signals visible on domestic front

* Domestic growth momentum remains robust

* India insulated from global banking crisis so far

* Inflationary expectations gradually easing

* Considerable noise in Jan-Feb CPI print due to cereals

* CPI above comfort zone now, but there are reasons for optimism

* Heat wave in February, rain in March seen having only local impact

* Core CPI may ease in FY24 on fall in industrial input prices

* Core CPI may ease in a protracted manner in FY24

* See inflation risks from climate factors in FY24

* See inflation risks from crude oil, food items such as milk

* See second-order inflation impact remaining subdued

* FY24 growth outlook improved, investment revival entrenched

* Growth outlook better on lesser hit from external demand

* Govt infrastructure focus to crowd in private investment, support growth

* Policy tightening needs to be calibrated judiciously

* Rate normalisation effects yet to fully transmit to economy

* Real rates expected to rise given projected inflation

* Real rates now positive by most measures

* Neither a ‘premature’ pause nor a ‘permanent’ one

* This is a ‘wait and watch’ pause

* Any durable fall towards 4% CPI target still distant

* Strength, resilience of economy, CPI fall gives confidence



* Weak global economy marked by decelerating demand

* Weak global economy marked by uncertain financial, energy markets

* Policy tightening in major economies behind weak demand

* Slower growth in China contributed to weak demand

* Ukraine war impacting a range of markets, including energy

* See global financial market uncertainty till inflation moderates

* Drag on India’s goods exports expected to prevail in FY24

* High frequency indicators hint at continued growth momentum

* Business outlook sentiments show a mixed picture

* Adverse weather may hit agriculture, poses risk to growth

* Deceleration in Feb a positive trend for inflation

* On-month fall in momentum a positive trend for inflation

* Significant downside risks to output growth momentum

* Cumulative impact of policy actions yet to be realised

* Geopolitical conflicts may lead to spike in inflation

* Aligning inflation with target remains a policy priority



* Global slowdown less severe than expected

* Signs of slowing in both global growth, inflation

* Global central banks’ tightening adequate

* Lagged effect of global tightening to bring down inflation

* Continued regulatory vigilance essential

* India financial sector outperformed under pluri-shocks

* Policy, buffers allow independence from advanced economies

* Signs of slowdown in some high frequency data in India

* Lagged effects of rate rise are just beginning

* Lagged effects of rate rise to play out in next few months

* India inflation is expected to come down over the year

* CPI cereal price issue to reverse as market prices fall

* Exchange rate is stable or strengthening

* Slowing momentum in consumer goods to bring down inflation

* Real policy rate enough to bring inflation to 4% target

* Higher real policy rate may lead to lower growth path

* No logic for overshooting policy rates and then cutting

* CAD has come down; its financing is no longer an issue

* Until clear CPI on way to 4%, this may not be end of hikes



* Two inflationary risks have come to fore since Feb meeting

* Balance of risks has shifted slightly towards inflation

* Deficient monsoon likely to create inflationary pressure

* Early signals on growth slowdown more visible than Feb

* May need monetary response if crude oil price nears 3 digits

* More tightening won’t be withdrawal of accommodation

* Must be vigilant on overshooting terminal policy rate

* OPEC output cut a worry if it has geopolitical impact

* OPEC output cut, monsoon outlook risks for inflation

* Overshooting terminal policy rate may slow economy too much

* Policy shouldn’t be made by looking at rear-view mirror

* Possible to undertake further tightening

* Real rates must rise more from Feb CPI differential

* Repo rate at same level as start of last easing cycle

* Best estimates show policy steps so far enough to tame CPI

* Increasing concern over patterns that may impact monsoon

* Monsoon-triggered inflation may call for counter measures

* No further withdrawal of accommodation remains to be done

* Policy doesn’t have luxury to respond to growth headwinds

* Will need to wait till May/early Jun for monsoon clarity

* Fail to comprehend meaning of MPC’s policy stance

* MPC had no choice in April but to assume normal monsoon

* MPC needs to keep close watch on evolving crude situation

* Other MPC members say language of stance crystal clear to market

* Must measure real rates from projected CPI 3-4 quarters ahead

* Little scope to bat for higher correct-measured real rate

* Projected fall in CPI to be result of past policy action

* Clear that war against inflation hasn’t been won yet

* Premature to declare an end to tightening cycle

* Need for heightened vigilance in face of fresh risks

* Have reservations, but refrain from dissent on stance



Compiled by Vishal Sangani

Filed by Ashish Shirke

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.


Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.


Informist Media Tel +91 (22) 6985-4000

Send comments to [email protected]


© Informist Media Pvt. Ltd. 2023. All rights reserved.

Source: Cogencis

Related Articles


Please enter your comment!
Please enter your name here

Stay Connected

- Advertisement -

Latest Articles

Popular Articles