RBI’s MPC member also supports rate changes other than in multiples of 25 bps..

RBI Governor Shaktikanta Das created interest and debates over why central banks need to change policy rates in multiples of 25 bps.

SK Ghosh of SBI pointed to evidence from China where rates were changed in non-multiples of 25 bps.

Further, in RBI MPC minutes of meeting held on 7-Apr-2019 were released yday. One of the members, Prof Ravindra Dholakia said:

As per the mandate given to the MPC, under such circumstances, we need to give a sustained boost to the economy. I, therefore, vote for a change of stance from neutral to accommodative with a 25 bps cut in the policy repo rate, though I would have preferred to cut it by 35-40 bps this time.

The discussions seem to have started in the MPC itself…

Prof Dholakia also calls core inflation as ‘so-called’:

I have been consistently arguing that unless the real growth exceeds 8-8.5 percent per annum, the output gap reflecting the unemployment gap in the economy is not likely to close. Till that point, there would be downward pressure on the labour market and market determined wages and thereby on the so-called ‘core’ inflation.

🙂

 

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