Contrasting Signals

Going by the minutes of the monetary policy committee (MPC) meeting, along with latest industrial production data, it seems the Reserve Bank of India (RBI) will go for a rate cut for the third consecutive time in June.

MPC minutes clearly reiterated focus on growth, emphasised by Governor Shaktikanta Das. The industrial output - at a 20-month low in February - indicates slowdown in the economy.

GDP growth was 6.6 per cent in the December quarter, the slowest in five quarters. Economists expect a further dip in the March quarter. A surge in crude oil prices above $75 per barrel and a depreciating rupee could push inflation higher. CPI inflation rose to 2.86 per cent in March after hitting a low of 1.97 per cent in January.

Deputy Governor Viral Acharya and external member Anand Ghate had argued for a status quo in the last two meetings due to concerns around inflation. With the governor and the deputy governor having contradictory views, the June policy may throw up interesting trends.