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Will the views of RBI MPC members converge or diverge at the November 3 meeting?

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Will there be unanimity among the members of the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on the decisions made on their November 3 meeting is the question that arises.



This was because at the MPC meeting in September, one member voted against the resolution to raise the repo rate by 50 basis points to 5.90 percent.

And also in the August meeting there were differences of opinion about the adopted decision.

“Even at the upcoming meeting everyone will have an opinion that will be considered by the RBI, I believe. That will be put in the letter to the central government,” a senior economist told IANS, who prefers anonymity.

The RBI has scheduled the MPC meeting for November 3 under Section 45ZN of the RBI Act.

According to the said section, if the RBI does not meet the inflation target, it will send a report to the central government listing: (a) the reasons for not meeting the inflation target; (b) corrective actions it proposes; and (c) an estimate of the timeframe in which the inflation target will be achieved if the proposed corrective actions are implemented in a timely manner.

The MPC will discuss at its upcoming meeting what it would tell the Center why it failed to contain inflation.

The RBI can also examine the central government on the evolution of inflation and the reasons why it may be at the high levels.

In India, retail inflation rose to 7.41 percent in September.

At the MPC meeting in September, Dr. Ashima Goyal opposed the resolution to raise the repo rate by 50 basis points to 5.90 percent.

Goyal was in favor of a 35 basis point increase and voted against the resolution.

However, the resolution was passed with a 5:1 majority.

At the same meeting, another member, Prof. Dr. Jayanth R. Varma, voted against the second part of the resolution on repealing housing to ensure inflation stays within target.

Varma said the MPC should now pause rather than focus on further tightening.

As for the upward revision of interest rates, he was in favor of an upward revision of 60 basis points instead of the 50 basis points proposed.

Since the difference between the two was only marginal, Varma voted in favour.

RBI Governor Shaktikanta Das had said that communications with the central government are privileged and will not be made public by the Bank.

However, according to Article 45ZL of the RBI Act, the minutes of the MPC meeting must be published.

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