INSUBCONTINENT EXCLUSIVE:
Country's headline consumer inflation rose to a four-month high of 4.87% on-year in MayMumbai: The Reserve Bank of India monetary policy
committee struck a balanced note on its rate stance going forward and cited rising inflation pressure due to high oil prices as the key
reason for raising interest rates in the June meeting, according to minutes of the meeting released by the RBI on Wednesday.The MPC members
raised concerns over rising household inflationary expectations which along with robust growth momentum could add to price pressure going
forward.However, the six members who had unanimously voted for a rate hike at the June 6 meeting preferred to wait for more clarity on the
inflationary impact of a government proposal to increase the minimum purchase price of foodgrains, along with the direction of oil prices
That prompted them to hold their stance at "neutral" instead of moving to "tight"."It will allow the MPC to determine in a flexible manner
what further monetary policy response is warranted based on an ongoing assessment of the inflation situation, inflation expectations and
growth prints in the coming months," RBI Deputy Governor Viral Acharya wrote in the minutes, referring to the neutral stance.India's
headline consumer inflation rose to a four-month high of 4.87 per cent on-year in May, with core inflation that excludes food and fuel
rising to around 6.20 per cent reflecting strong demand pressure.India posted its best growth in nearly two years at 7.7 per cent in
January-March quarter."The minutes are quite balanced and no one is giving any statement about future rate hikes," said a senior treasury
banker at a foreign bank."It is heartening to see that this time the minutes are similar to what they mentioned in the policy statement
unlike last time," the banker added.Another MPC member, Ravindra Dholakia, who had opposed rate hikes, changed his view on rising inflation
risks and a strong economic recovery and said "prudence lies in retaining the neutral policy stance, but increase the policy rate by 25 bps
for now".Pointing to high oil prices, the RBI in June raised its inflation projection by 30 basis points to 4.7 per cent by March 2019
staff and is published from a syndicated feed.)
