Two MPC members strongly argued for a repo rate cut in the June meeting

Mumbai: Two external members of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) made a strong proposal to reduce the repo rate. Since February 2023, the repo rate has remained constant at 6.50 percent.

The minutes of the MPC meeting held in the first week of June were released on Friday, in which two external members of the MPC, Asima Goyal and Jayant Verma, argued that there was scope for a cut in the repo rate. They called for a 25 basis point cut in the repo rate.

However, the remaining six-member MPC supported keeping the repo rate on hold. These members voted in favour of keeping the repo rate on hold, terming the food inflation rate high. The decline in food inflation has slowed down in the final stage.

Rejecting the argument that monetary policy tightening is needed to spur robust economic growth, Goyal said growth is slower than its potential and could fall if consumption remains weak.

Verma expressed concern over the impact of tight monetary policy on development in the current financial year. After April, he also supported reducing the repo rate in the June meeting.

The minutes quoted Verma as saying that prolonged tight monetary policy is likely to impact the economy's growth even in 2025-26.

Due to high food inflation, Reserve Bank Governor Shaktikanta Das has reiterated the decision to keep the repo rate intact.