India: RBI postpones MPC meeting scheduled for this week with three slots yet to be filled

  • The Reserve Bank of India (RBI) deferred this week’s scheduled Monetary Policy Committee (MPC) meeting a day before it was to start with the government not having finalised the three independent members of the six-member panel that sets policy interest rates.
  • That’s unlikely to disturb the RBI’s market-related functioning as investors weren’t expecting any interest rate action, as indicated in an ET poll of 20 market participants on the weekend.
  • This comes as the efficacy of inflation targeting, the key aim of the MPC, is being debated amid the collapse of growth. The central bank did not cite any reason for the postponement or say when the next meeting would take place.
  • While there was speculation over the term of the outgoing members being extended, such an action might have been challenged as violative of the RBI Act, said a person who didn’t want to be named. The RBI’s other activities such as market operations and liquidity measures will go on as normal as they do not need MPC approval.
  • The government was expected to nominate three independent members to replace Ravindra Dholakia, Pami Dua and Chetan Ghate after their four-year term ended. Among those said to be in the reckoning as replacements were Ashima Goyal, Jayanath Verma, Shamika Ravi and V Ananth Nageswaran.
  • The MPC has six members with voting powers, three of them from the RBI. Apart from the governor, they are the deputy governor and executive director dealing with monetary policy. The other three members are nominated by the government.
  • The governor has a casting vote in case of a tie. While the government hasn’t said why there has been a delay, investors said there could have been some technical issues.

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