No: 14th
Attendants:
Dr Chetan Ghatge, Professor, Indian Statistical Institute
Dr. Pami Dua, Director, Delhi School of Economics
Dr. Ravindra H. Dholakia, former Professor, Indian Institute of Management, Ahmedabad
Dr. Michael Debabrata Patra, Executive Director
Dr. Viral V. Acharya, Deputy Governor in charge of monetary policy
Dr. Urjit R. Patel, Governor (Ex)
The Monetary Policy Committee has drawn conclusions based on certain surveys which were used as reference for keeping the repo rate unchanged at 6.50%, and retaining the stance as calibrated tightening considering the global scenario (strenghtening US dollar, slowdown in Crude oil price & rising trade tensions) and domestic macro-economic factors.
What were the essential factors there were necessary to decide whether to change the repo rate or not?
Well, RBI's MPC has to consider various factors from macro angle to arrive at a point worth deciding whether to change or not and that also includes a round of voting which has to be taken by the MPC members. Now these factors are:
1) Consumer confidence
2)Household inflations' expectation
3)Corporate sector performance
4)Credit Condtions
5)The Outlook for industrial, services and infrastructure sectors
6) Projections of professional forecasters
Staff's macroeconomic projection's were also taken into consideration as an alternative.
What was the reason for maintaining the stance as calibrated tightening?
With the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth
Global factors:
Domestic Factors:
GDP ↓ for second quarter due to moderations in private consumption and a drag in net export.
The reasons behind moderation is private consumption are:
1-moderation in rural demand
2-subdued growth in kharif output
3-depressed prices of agricultural commodities
4-sluggish growth in rural wages
Government final consumption expenditure (GFCE) strengthened, buoyed by higher spending by the central government.
Gross Fixed Capital Formation went upto double digits due to investment in national highways and rural infrastructure which also led to the growth of cement and steel production ( a major factor in construction)
Supply side GVA - 6.9 % in Q2:
Agri ↓
Manufacturing ↓
Services- Neutral
But in October month industrial activity increased.
Attendants:
Dr Chetan Ghatge, Professor, Indian Statistical Institute
Dr. Pami Dua, Director, Delhi School of Economics
Dr. Ravindra H. Dholakia, former Professor, Indian Institute of Management, Ahmedabad
Dr. Michael Debabrata Patra, Executive Director
Dr. Viral V. Acharya, Deputy Governor in charge of monetary policy
Dr. Urjit R. Patel, Governor (Ex)
The Monetary Policy Committee has drawn conclusions based on certain surveys which were used as reference for keeping the repo rate unchanged at 6.50%, and retaining the stance as calibrated tightening considering the global scenario (strenghtening US dollar, slowdown in Crude oil price & rising trade tensions) and domestic macro-economic factors.
What were the essential factors there were necessary to decide whether to change the repo rate or not?
Well, RBI's MPC has to consider various factors from macro angle to arrive at a point worth deciding whether to change or not and that also includes a round of voting which has to be taken by the MPC members. Now these factors are:
1) Consumer confidence
2)Household inflations' expectation
3)Corporate sector performance
4)Credit Condtions
5)The Outlook for industrial, services and infrastructure sectors
6) Projections of professional forecasters
Staff's macroeconomic projection's were also taken into consideration as an alternative.
What was the reason for maintaining the stance as calibrated tightening?
With the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth
Global factors:
1) Advanced economies:
United States: Growth appearing to be slowing down
Euro:( ↓) due to weaker trade growths and new vehicle emission standards
Japan: ( ↓) due to subdued to external growth and domestic demand
2) Emerging market economies
China (↓) - Weak domestic demand
Russia( ↓)- Weak agricultural harvest
South Africa (↑)
Brazil (↑)
Other international factors:
Crude oil ↓ - Ease of geo-political tensions and increase of supply
Base metal prices ↓- Weak demand
Gold price ↑
Global financial markets have been driven mainly by rising policy rates in the US, volatile crude oil prices and expectations of a slowdown compared with earlier projections.
Domestic Factors:
GDP ↓ for second quarter due to moderations in private consumption and a drag in net export.
The reasons behind moderation is private consumption are:
1-moderation in rural demand
2-subdued growth in kharif output
3-depressed prices of agricultural commodities
4-sluggish growth in rural wages
Government final consumption expenditure (GFCE) strengthened, buoyed by higher spending by the central government.
Gross Fixed Capital Formation went upto double digits due to investment in national highways and rural infrastructure which also led to the growth of cement and steel production ( a major factor in construction)
Supply side GVA - 6.9 % in Q2:
Agri ↓
Manufacturing ↓
Services- Neutral
But in October month industrial activity increased.
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