The Reserve Bank of India’s new set of growth-focused policy makers will need to grapple with stubbornly high inflation in their first meeting this week, preventing them from cutting interest rates.
The Monetary Policy Committee is set to maintain the benchmark repurchase rate at 4% Friday, according to all 24 economists surveyed by Bloomberg. The government appointed three new external members to the six-person MPC this week, academics who have favored monetary and fiscal stimulus in the past to fire up the economy.
While Governor Shaktikanta Das has led the previous MPC in cutting rates by 115 basis points this year, he’s taken a more cautious approach recently as consumer prices spiked. Das is keen to preserve policy space in case economic growth prospects sour further as India becomes a global hotspot for the coronavirus pandemic.
“The upcoming policy will be a damp squib