India Economics Weekly:Decoding RBI's June MPC minutes

The June MPC minutes were released this week, which showed that one of theMPC members Dr. Ravindra Dholakia opted for a 50bps rate cut in the recentpolicy, dissenting from the other members who preferred to stay on a wait andwatch mode at this juncture. How the pendulum has swung since the April policymeeting! The minutes of the April policy meeting were unambiguously hawkish,with Dr. Patra even suggesting that maybe a preemptive 25bps rate hike wouldhelp the central bank to guide CPI inflation lower to 4% on a durable basis. Below,we compare the key excerpts of the MPC minutes between June and April, tohighlight what each member had said.

    We list down the MPC members in terms of their hawkishness quotient. By nowit is clear that Dr. Patra is the most hawkish MPC member, with Dr. Dholakiabeing on the opposite side of the spectrum. The rest of the members are placedaccording to our subjective assessment of their hawkishness quotient, based onthe statements made by the members as per the MPC minutes.

    We think this exercise is important because a rate cut will only be delivered if4 out of the 6 MPC members agree for easing rates. We know already that Dr.Dholakia is in favour of a rate cut; so at least three other members will have to optfor a rate cut, for the rate cut decision to be successful. Having listed the MPCmembers in this manner, we first highlight the key guidance given by each of themember in the June MPC minutes and compare that to what they had said inthe April minutes. Apart from highlighting the key message given by each MPCmember, we also detail their views on inflation/inflation expectations and growth/output gap in a separate table, to compare the degree of comfort/concern of eachMPC member regarding the key macro variables.