M Patra pushed for rate hike at RBI's monetary policy review meet

M Patra pushed for rate hike at RBI's monetary policy review meet: But minutes of meeting show executive director voting for status quo...


There is nothing unnatural in expressing one's view on an issue in such forums and later falling in line with a position which, in balance, seems comfortable, at the voting stage. Such media analysis can result in reducing transparency in deliberations.


My response:

MPC proceedings

This refers to Abhijit Lele’s story “Patra  pushed for rate hike at RBI meet” (Business Standard, April 21). While the text of the report is a balanced one the caption read with the note “But minutes of the meeting show executive director voting for status quo” gives an impression that Michael Patra has done something unusual or ‘acted under duress’, which is not the case.
Patra concludes his statement asunder:
“To sum up, I believe that a pre-emptive 25 basis points increase in the policy rate now will point us better at the target of 4 per cent to which the Committee has committed explicitly. It will also obviate the need for back-loaded policy action later when inflation is unacceptably high and entrenched. On balance, however, I vote for holding the policy rate unchanged in this bi-monthly meeting and await a few more readings of incoming data so that remaining transitory factors have passed and a clearer assessment of domestic and global macroeconomic conditions emerges.”
Since the present Monetary Policy Committee became functional, it meets for two days and RBI Governor announces the Bimonthly Monetary policy based on the recommendation of the MPC on the second day. The deliberations of MPC are transparent to the extent that views expressed by each member including Governor are made public.
I think, voting by a member and the views expressed by him at the meeting should be seen separately, as voting could be influenced by the strength of argument put forth by other members also. MPC should be given some more time to evolve its own procedures and practices without affecting the free and fair expression of views by each member during the meetings.
M G Warrier, Mumbai

M G Warrier


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