Reserve Bank of India Governor Urjit Patel voiced concern over rising crude oil prices and fiscal slippage, during the meeting of the fifth bi-monthly monetary policy review held earlier this month.
“The recent upturn in crude oil prices has emerged as a source of concern,” Dr. Patel said. “Several uncertainties, especially on the fiscal and external fronts, persist. It is, therefore, important to be vigilant,” he said, voting for a status quo. The central bank released the minutes of the monetary policy committee meeting, on Wednesday.
RBI maintained status quo for the second straight meeting, which was voted by five out of six members.
Only R.H. Dholakia had voted for a 25 bps rate cut. The key policy rate or the repo rate is currently at 6%.
“Fiscal slippage concerns linger on. Should this risk materialise, it would have implications for the inflation outlook,” Dr. Patel said.
While the RBI has maintained a neutral stance on interest rate, one of the members of the committee, M.D. Patra, said the time had come to be ready to go on the front foot. “Price pressures are no more confined to vegetables alone, as in previous readings; they are getting diffused across petroleum products, services, and into underlying inflation,” Mr. Patra said. Deputy Governor Viral Acharya, said “There seems little scope for accommodation or for change of stance at the present juncture.”
