“I believe that a rate cut would help in reviving economic growth without worsening the inflationary situation, which may soften with seasonal correction in prices. Hence, I will again vote for a 25-basis point cut in the repo rate while keeping a neutral stance. In addition, we should also explore the use of non-rate measures for enhancing liquidity, such as a 50-basis point cut in CRR, to help enhance liquidity,” he said according to the MPC minutes shared by the central bank.
Kumar further voted against keeping the repo rate unchanged, along with Prof. Ram Singh who was the only other member to vote the same.
The RBI MPC on December 6, with a majority of 4:2, decided to keep the repo rate (key lending rate) unchanged at 6.5% for the 11th consecutive meeting, citing concerns over inflation and the uncertain growth outlook.
The central bank chose to maintain its ‘neutral’ stance, which it had adopted in the October meeting, moving away from the earlier ‘withdrawal of accommodation’ stance.
Former RBI Governor Shaktikanta Das, while announcing the decision, noted that the RBI’s hawkish outlook on inflation was due to persistently high food inflation, which has yet to stabilise. Despite this, the central bank remains optimistic about India’s growth outlook, supported by good monsoon seasons and the anticipated revival of capital expenditure.”MPC took note of cent slowdown in growth momentum which translates into downward revision in growth forecast for current year,” Das had said.