Continued divergence at RBI on battle against inflation

There is continuing divergence within the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on the way the battle against the inflation is to be fought.

In a 5:1 decision, the MPC decided to increase the repo rate by 35 basis points (bps) on Wednesday with RBI Governor Shaktikanta Das saying the battle against inflation was continuing.

The repo rate, also called the policy rate, is the interest at which the RBI lends money to the commercial banks.

While five members of the MPC — Das, Shashanka Bhide, Ashima Goyal, Rajiv Ranjan and Michael Debabrata Patra voted in favour of 35 bps hike, the lone dissenting voice was that of Jayanth R. Varma who voted against the majority decision.

As regards the withdrawal of accommodation to ensure inflation remains with the target going forward, while supporting growth, Bhide, Ranjan, Patra and Das voted in favour Ashima Goyal and Varma voted against this part of the resolution

Curiously at the September MPC meeting, Goyal voted against the resolution to hike the repo rate by 50 basis points to 5.90 per cent. Goyal was for a hike of 35 basis points.

At the same meeting, Varma had voted against the second part of the resolution on the withdrawal of accommodation to ensure inflation remains within the target.

(Venkatachari Jagannathan can be reached at




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