Skip to main content

New panel may set interest rate in next monetary policy

By
The government has initiated the process of constituting a monetary policy committee ( MPC), bringing into force the relevant amendments in the Reserve Bank of India ( RBI) Act from Monday, the finance ministry stated.
Rules governing the procedure for selection of members of and terms and conditions of their appointment and factors constituting failure to meet the inflation target under the MPC framework were notified, it said. However, at the time of going to print, the changes had not been notified on the Gazette of India website. Nor had the RBI Act on the central bank’s website been changed.
The MPC will decide the benchmark interest rates, which have so far been decided by the RBI governor.
After long disagreements on the MPC composition between the ministry and RBI, it had finally been agreed that it would have six members. The governor will head the panel. Three members, including the governor, will be from the RBI. They will be a deputy governor and an executive director.
The other three members will be nominated by the government after recommendations of a search- cum- selection committee, headed by the Cabinet secretary. The search panel will also comprise the economic affairs secretary and the RBI governor.
Each MPC member will have one vote, with the governor having an additional vote in case of a tie.
“Three members of MPC will be experts in the field of economics or banking or finance or monetary policy and will be appointed for a period of four years and shall not be eligible for re- appointment. The meetings shall be held at least four times ayear and it shall publicise its decisions after each such meeting,” went the statement.
Additionally, and as reported earlier, RBI will publish a monetary policy report every six months, with forecasts of inflation for between six and 18 months. If RBI fails to meet the inflation target, it will provide reasons, remedial actions and the estimated time within which the target will be achieved.
While the process for appointing the government’s nominees is still ongoing, some media outlets have named economists Chetan Ghate, Errol D’Souza and Ashima Goyal as probable candidates. Senior government sources dismissed these reports as speculation.
Business Standard New Delhi, 28th June 2016

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more