Key Points
Mumbai: The two monetary policy committee (MPC) members who voted to cut interest rates and change monetary policy stance at its last meeting believe the Indian economy needs to grow at joined its potential growth of 8%, as inflation continues to approach the target of 4%..
Jayanth Varma, who had been voting for a rate cut since February this year, argues that MPC should start cutting rates this quarter to give a boost to growth in FY26..
The other MPC member Ashima Goyal, who voted for a rate cut for the first time in the last policy, believes the approach to inflation target has not been affected by any new supply shocks since the last policy..
While RBI members consider it appropriate to take the leeway provided by strong growth to focus on bringing inflation down durably, the dissenting external members argued that it is time to prioritize growth as economy is growing at below its potential growth rate..
According to the minutes, Varma argued that keeping 2% real interest rate - difference between repo rate of 6.5% and inflation of 4.5% - for too long will hurt growth for next two years...
