Vacancies Delay RBI Meet On Interest Rates. "Shambolic", Say Economists

Marco Green
September 28, 2020

"The meeting of the Monetary Policy Committee (MPC) during September 29, 30 and October 1, 2020 as announced ... is being rescheduled".

The lack of quorum in the MPC forced the Reserve Bank of India on Monday to postpone the three-day meeting, which was scheduled to start from September 29. "The dates of the MPC's meeting will be announced shortly", the RBI said in its brief statement.

The MPC, which came into being in 2016, has lowered interest rates by 115 basis points so far this year.

The MPC is a six-member team with three members from the RBI and three external.

The government has all but decided on the new external members of the Monetary Policy Committee (MPC), and the next meeting will likely be held next week, a senior official told Moneycontrol.

The government in 2016 appointed Chetan Ghate, a professor at Indian Statistical Institute; Pami Dua, director at Delhi School of Economics (DSE); and Ravindra Dholakia, professor at Indian Institute of Management, Ahmedabad, as independent members of the MPC for four years. The eventual appointment of external members will not alter the decision on the rate action as the RBI is empowered to take a call given the abundant technical expertise that it has on its own even on the MPC Board.

Speaking at a press briefing on Monday, September 28, 2020, Governor of the Central Bank, Ernest Addison explained the decision was based on the drivers of economic growth returning to normal prospects for a good recovery.

The MPC, which must have a quorum of four, can not meet unless the central government appoints new independent members. Set in 2016, it requires the RBI to keep inflation at the 4% midpoint of a 2%-6% range.

To be sure, analysts were not expecting a rate cut at the meeting.

Other reports by Click Lancashire

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