RBI’s MPC unanimous in keeping rates unchanged, member echoes reservation

New Delhi, June 22 : Though all the six members of Reserve Bank of India’s (RBI) monetary policy committee (MPC) unanimously voted to keep the repo rates unchanged during their meeting held earlier this month, one member expressed reservation at the decision, noting that the central bank’s stance has become increasingly disconnected from the reality.

MPC member Jayanth Varma expressed reservations on continuation of the policy stance during the June 6-8 meeting of the rate setting committee of the RBI, whose minutes were released on Thursday by the central bank.

He however did not mark his dissent, saying that the stance was vestigial at this juncture.

“I have therefore seriously considered dissenting on this part of the resolution, but after careful thought I have decided to confine myself to expressing reservations on it,” Varma was quoted as saying in the minutes.

“The main reason for not dissenting is that, after two successive meetings at which the repo rate has been left unchanged, this stance now appears more vestigial than a serious statement of intent,” he noted.

The minutes also showed that a majority of the MPC members were cautious in their approach, regarding inflation.

However at the same time, they agreed that inflationary pressure was easing.

The retail inflation rate dropped for the fourth month in a row in May, falling to 4.25 per cent from 4.70 per cent in April.

Retail inflation for May in fact was at the lowest level in the last 24 months.

The MPC had kept the repo unchanged at 6.5 per cent.