Newly released MPC minutes reveal where RBI members & and new external members agree, and where they differ

MUMBAI: The minutes of the MPC meeting held on October 9 became public on October 23, giving insights into — among other things — the views of the three new external members RBI’s rate setting panel. The minutes suggested that the three share the RBI members’ neutral-to-dovish outlook, but the bases of their views differ. While the RBI members’ dovishness stems from optimism that things will improve, the three external members are more concerned about a slowdown, a ToI report underlined.

According to the minutes, Nagesh Kumar, one of the new external members, voted for a 25 basis point rate cut. He pointed out slowing economic growth and demand deficits both domestically and internationally. Kumar mentioned, “Demand deficits may be the reason private investment has not picked up momentum despite companies’ healthy balance sheets and all the reforms and incentives extended by govt.” He also noted that growing protectionism, trade wars, and the failure of multilateral trade talks have slowed down globalisation, referring to it as “slowbalisation.”

Another external member, Saugata Bhattacharya, supported a neutral stance. Bhattacharya highlighted concerns about the loss of growth momentum, uncertain demand, and external risks like geopolitical factors and rising commodity prices. He acknowledged mixed signals in the economy, citing positive aspects but also concerns about manufacturing slowdown, declining personal vehicle sales, low rural wages, and weak export growth.

The third new member, Ram Singh, had a more optimistic view. He noted resilient domestic growth driven by both consumption and investment but shared the committee’s generally dovish outlook.

While Kumar was the only one to push for a rate cut, the other members decided to maintain the current rate. Thus, the MPC opted for a pause in the October 9 meeting.