BROWSE

India’s monetary policy committee constrained by rising inflation -minutes

Rising inflation has complicated the task of India’s monetary policy committee and could limit its ability to support growth, its August meeting minutes showed on Thursday, while it also called on the government for more fiscal action. On Aug. 6, the MPC unanimously decided to hold interest rates steady while keeping its stance accommodative as long as necessary to revive growth and mitigate the impact of COVID-19 while ensuring inflation remains within target. Despite the dovish tone, the minutes suggest the bank sees little room for rate cuts in the current environment. “Inflation surprises of recent months are undermining the MPC’s actions and stymieing its resolve to do what it takes to revive growth and mitigate the impact of COVID-19 on the economy,” deputy governor Michael Patra wrote in the minutes. Almost all members highlighted the uncertainty on the inflation front and the need for more fiscal measures that would help the economic recovery as the MPC’s hands are tied due to its inflation-targeting mandate. The MPC is mandated to maintain inflation at 4% over the medium term and keep it within a 2% to 6% range at all times. A breach of this band for three straight quarters would require the committee to offer an explanation to the government. Inflation has remained above this range in the last two quarters. “Monetary policy is forced into a standstill even when there is space available to persevere with its commitment to reinvigorate growth momentum and alleviate the effects of COVID-19,” Patra said. If inflation stays above the upper tolerance band for one more quarter the committee must by mandate undertake remedial action to head off the build-up of inflation pressures and prevent it from getting generalised, Patra said. “This should be a crisis that is not wasted. The government must continue to focus on much needed structural reforms. Some fiscal space should be reserved for later outbreaks,” MPC member Chetan Ghate wrote. Almost all members however said that growth is still fragile and that while accurate growth forecasts are not possible at the moment point, the country was likely to see a significant contraction in 2020/21, making it difficult to completely ignore the risks to growth. The Indian economy is likely to contract this quarter and next, according to a recent Reuters poll. “Although there is headroom for further monetary policy action, at this juncture it is important to keep our arsenal dry and use it judiciously,” Governor Shaktikanta Das wrote. (Additional reporting by Chris Thomas and Derek Francis in Bangalore; Editing by Euan Rocha and Hugh Lawson) Our Standards:The Thomson Reuters Trust Principles.0 : 0narrow-browser-and-phonemedium-browser-and-portrait-tabletlandscape-tabletmedium-wide-browserwide-browser-and-largermedium-browser-and-landscape-tabletmedium-wide-browser-and-largerabove-phoneportrait-tablet-and-aboveabove-portrait-tabletlandscape-tablet-and-abovelandscape-tablet-and-medium-wide-browserportrait-tablet-and-belowlandscape-tablet-and-belowAppsNewslettersAdvertise with UsAdvertising GuidelinesCookiesTerms of UsePrivacyDo Not Sell My Personal InformationAll quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays. © 2020 Reuters. All Rights Reserved. window.RCOM_Data = {"header_gdphfckvz1":{"template":"header","evergreens":[{"url":"https://www.reuters.com/news/world","name":"World","sponsored":false},{"url":"https://www.reuters.com/finance","name":"Business","sponsored":false},{"url":"https://www.reuters.com/finance/markets","name":"Markets","sponsored":false},{"url":"https://www.reuters.com/politics","name":"Politics","sponsored":false},{"url":"https://www.reuters.tv/","name":"TV","sponsored":false}],"topics":[{"url":"https://www.reuters.com/brexit","name":"Brexit","sponsored":false},{"url":"https://www.reuters.com/subjects/sustainable-business","name":"Sustainability","sponsored":false},{"url":"https://www.reuters.com/subjects/myanmar-reporters","name":"Imprisoned In Myanmar","sponsored":false},{"url":"https://www.reuters.com/subjects/charged","name":"Future of Cars","sponsored":false},{"url":"https://www.reuters.com/places/venezuela","name":"Venezuela","sponsored":false},{"url":"https://www.reuters.com/the-world-at-work","name":"World At Work","sponsored":false},{"url":"https://www.reuters.com/breakingviews","name":"Breakingviews","sponsored":false},{"url":"","name":"","sponsored":false},{"url":"","name":"","sponsored":false},{"url":"","name":"","sponsored":false},{"url":"","name":"","sponsored":false},{"url":"","name":"","sponsored":false}],"featured_stories":[{"displayName":"U.S. Presidential Election","url":"//www.reuters.com/article/us-usa-election-convention/biden-to-accept-democratic-nomination-lay-out-vision-for-post-trump-america-idUSKBN25G10W","image":"//pictures.reuters.com/Doc/RTR/Media/TR3_UNWATERMARKED/4/8/b/3/RTX7QM0N.jpg","headline":"Biden to formally accept nomination, lay out vision for post-Trump America"},{"displayName":"Russia","url":"//www.reuters.com/article/us-russia-politics-navalny-comment/my-death-wouldnt-help-putin-kremlin-critics-parting-remark-idUSKBN25G216","image":"//static.reuters.com/resources/media/global/assets/images/20200820/20200820_5937402320200820164947.jpg","headline":"My death wouldnu0027t help Putin: Navalnyu0027s parting remark"},{"displayName":"Greenland","url":"//www.reuters.com/article/us-climate-change-arctic/greenlands-ice-sheet-saw-record-mass-loss-in-2019-study-finds-idUSKBN25G1RM","image":"//s4.reutersmedia.net/resources/r/?mu003d02u0026du003d20200820u0026tu003d2u0026iu003d1530362009u0026ru003dLYNXMPEG7J10X","headline":"Worst-case scenario redefined as ice sheet sees record mass loss"},{"displayName":"Life amid pandemic","url":"//www.reuters.com/article/us-health-coronavirus-israel-floating-ci/israel-opens-floating-cinema-for-coronavirus-safe-viewing-idUSKBN25G2AR","image":"//static.reuters.com/resources/media/global/assets/images/20200820/20200820_8855024820200820183230.jpg","headline":"Israel opens first u0027sail-inu0027 cinema"},{"url":"/article/us-usa-trump-bannon/steve-bannon-key-to-trumps-rise-charged-with-defrauding-border-wall-supporters-idUSKBN25G1J4","image":"//pictures.reuters.com/Doc/RTR/Media/TR3_UNWATERMARKED/e/3/c/b/RTX7QS1N.jpg","headline":"Bannon pleads not guilty to fraud charges; freed on bail"}],"render_key":"header_gdphfckvz1","menu":[{"url":"/home","name":"Home"},{"url":"/finance","name":"Business","children":[{"url":"/finance","name":"Business Home"},{"url":"/legal","name":"Legal"},{"url":"/finance/deals","name":"Deals"},{"url":"/subjects/aerospace-and-defense","name":"Aerospace u0026 Defense"},{"url":"/subjects/banks","name":"Finance"},{"url":"/subjects/autos","name":"Autos"},{"url":"/finance/summits","name":"Reuters Summits"},{"url":"/subjects/sustainable-business","name":"Sustainable Business"},{"url":"/the-world-at-work","name":"The World at Work"}]},{"url":"/finance/markets","name":"Markets","children":[{"url":"/finance/markets","name":"Markets Home"},{"url":"/finance/markets/us","name":"U.S. Markets"},{"url":"/finance/markets/europe","name":"European Markets"},{"url":"/finance/markets/asia","name":"Asian Markets"},{"url":"/finance/global-market-data","name":"Global Market Data"},{"url":"/markets/stocks","name":"Stocks"},{"url":"/markets/bonds","name":"Bonds"},{"url":"/markets/currencies","name":"Currencies"},{"url":"/markets/commodities","name":"Commodities"},{"url":"/finance/funds","name":"Funds"},{"url":"/finance/EarningsUS","name":"Earnings"},{"url":"/finance/markets/dividends","name":"Dividends"},{"url":"/finance/exchange-traded-funds","name":"Exchange-Traded Funds"},{"url":"/subjects/us-lipper-awards","name":"Lipper Awards"},{"url":"https://stockscreener.us.reuters.com/Stock/US/Index?quickscreenu003dgaarp","name":"Stock Screener"},{"url":"https://funds.us.reuters.com/US/screener/screener.asp","name":"Fund Screener"}]},{"url":"/news/world","name":"World","children":[{"url":"/news/world","name":"World Home"},{"url":"/news/us","name":"U.S."},{"url":"/subjects/specialReports","name":"Special Reports"},{"url":"//www.reuters.com/investigates/","name":"Reuters Investigates"},{"url":"/subjects/euro-zone","name":"Euro Zone"},{"url":"/subjects/middle-east","name":"Middle East"},{"url":"/places/china","name":"China"},{"url":"/places/japan","name":"Japan"},{"url":"/places/mexico","name":"Mexico"},{"url":"/places/brazil","name":"Brazil"},{"url":"/places/africa","name":"Africa"},{"url":"/places/russia","name":"Russia"},{"url":"/places/india","name":"India"}]},{"url":"/politics","name":"Politics","children":[{"url":"/politics","name":"Politics Home"},{"url":"/politics/us-election2020","name":"Election 2020"},{"url":"/subjects/supreme-court","name":"Supreme Court"},{"url":"https://graphics.reuters.com/USA-POLLING-TRUMP/0100422Q4HZ/index.html","name":"Polling on the President"}]},{"url":"/news/technology","name":"Tech","children":[{"url":"/news/technology","name":"Technology Home"},{"url":"/news/science","name":"Science"},{"url":"/news/media","name":"Media"},{"url":"/energy-environment","name":"Energy and Environment"}]},{"url":"/breakingviews","name":"Breakingviews","children":[{"url":"/breakingviews","name":"Breakingviews Home"},{"url":"/video/breakingviews","name":"Breakingviews Video"}]},{"url":"/finance/wealth","name":"Wealth","children":[{"url":"/finance/wealth","name":"Wealth Home"},{"url":"/finance/personal-finance/retirement","name":"Retirement"}]},{"url":"/news/lifestyle","name":"Life","children":[{"url":"/news/health","name":"Health"},{"url":"/news/sports/soccer","name":"Soccer"},{"url":"/news/sports","name":"Sports"},{"url":"/news/entertainment/arts","name":"Arts"},{"url":"/news/entertainment","name":"Entertainment"},{"url":"/news/oddlyEnough","name":"Oddly Enough"}]},{"url":"/news/pictures","name":"Pictures","children":[{"url":"/news/pictures","name":"Pictures Home"},{"url":"http://widerimage.reuters.com","name":"The Wider Image"},{"url":"http://widerimage.reuters.com/photographer","name":"Photographers"}]},{"url":"/video","name":"TV"}],"config":{"edition":"BETAUS","lang":"en","ad_slots":{"mobile_first_canvas_hb":"no","inline_flex_mobile_sizes":[[2.0,2.0],[1.0,1.0],[1100.0,375.0],[300.0,250.0],"fluid"],"mobile_canvas_sizes":[[1100.0,200.0],[1100.0,300.0],[300.0,250.0],[1.0,1.0]],"mobile_mpu2_type":"bizdevmobwebfooter_1","feed_ad_sizes":[[1100.0,375.0],[300.0,212.0],[300.0,250.0],[1.0,1.0],"fluid"],"mobile_canvas_hb":"no","mobile_mpu_type":"mpu","rr_mpu2_type":"bizdev_article_rr2","rr_big2_type":"bizdev_article_rr3","mobile_canvas_type":"leaderboard","rr_big2_sizes":[[300.0,440.0]],"bottom_article_slot1_sizes":[[1100.0,420.0],"fluid"],"rr_big_sizes":[[300.0,462.0],[300.0,372.0],[1.0,1.0]],"mobile_big_sizes":[[300.0,472.0],[1.0,1.0]],"rr_mpu_hb":"yes","bottom_article_slot1_type":"connatix","mobile_first_canvas_type":"leaderboard","inline_flex_sizes":[[2.0,2.0],[1.0,1.0],[1100.0,375.0],"fluid"],"inline_native_type":"native","mobile_big_type":"bizdevmobwebfooter","first_canvas_sizes":[[728.0,90.0],[970.0,250.0],[970.0,90.0],[1100.0,100.0],[1.0,1.0]],"inline_canvas_sizes":[[2.0,2.0],[1.0,1.0],[1100.0,375.0],"fluid"],"inline_native_sizes":[[2.0,2.0],[1.0,1.0],[1100.0,375.0],[3020.0,375.0],"fluid"],"canvas_hb":"yes","mobile_first_canvas_sizes":[[1100.0,200.0],[1100.0,100.0],[1.0,1.0]],"canvas_type":"leaderboard","rr_mpu_type":"mpu","bottom_article_slot2_type":"bizdev_article_center","feed_ad_type":"landing","leaderboard_low_type":"leaderboardlow","mobile_mpu2_sizes":[[300.0,250.0],[1.0,1.0]],"bottom_article_slot1_mobile_sizes":[[300.0,450.0],"fluid"],"mobile_feed_ad_sizes":[[1100.0,375.0],[300.0,212.0],[300.0,250.0],[1.0,1.0],"fluid"],"rr_mpu_sizes":[[300.0,250.0],[1.0,1.0]],"bottom_article_slot2_sizes":[[300.0,300.0],[1100.0,420.0],[1.0,1.0],"fluid"],"first_canvas_type":"leaderboard","leaderboard_low_sizes":[[728.0,90.0],[970.0,250.0],[1100.0,100.0],[1100.0,200.0],[1100.0,300.0],[1.0,1.0]],"inline_native_mobile_sizes":[[2.0,2.0],[1.0,1.0],[1100.0,375.0],[300.0,250.0],"fluid"],"first_canvas_hb":"yes","mobile_mpu_sizes":[[2.0,2.0],[1.0,1.0],[1100.0,375.0],[300.0,250.0],[3020.0,375.0],"fluid"],"canvas_sizes":[[728.0,90.0],[970.0,250.0],[970.0,90.0],[1100.0,100.0],[1100.0,200.0],[1100.0,300.0],[1.0,1.0],[2.0,2.0]],"rr_mpu2_sizes":[[300.0,280.0]],"rr_big_type":"bizdev_article_rr1"}}},"article_list_qbzjbaxaow":{"template":"article_list","fisco_kyodo_disclaimer":"","render_key":"article_list_qbzjbaxaow","quote_path":"/finance/stocks/overview","tracking_data":{"channel":"News","content_type":"Article","content_type_channel":"News","content_channel":"Markets - Asia Markets","topic_channel":"Markets","topic_subchannel":"Asia Markets","backend_channel":"marketsNews"},"dart_domain":"us.reuters","fisco_kyodo_key":"","sharetools":["twitter","facebook"],"video_url":"https://queso-cdn.prod.reuters.tv/new/index.html","trustBadge_excludedChannels":"false","first_article":{"id":"USL8N2FM3Z1","source":"Reuters","layout_type":"default","channel":{"text":"Market News","path":"/news/archive/marketsNews"},"headline":"Indiau0027s monetary policy committee constrained by rising inflation -minutes","authors":[{"name":"Swati Bhat","journalist_url":"/journalists/swati-bhat"}],"shareUrl":"https://reut.rs/3iX4PHe","published":1597966270,"updated":0,"path":"/article/india-cenbank-minutes/indias-monetary-policy-committee-constrained-by-rising-inflation-minutes-idUSL8N2FM3Z1","location":"MUMBAI","body":"u003cpu003eBy Swati Bhatu003c/pu003enu003cpu003eMUMBAI, Aug 20

Comments are closed.