More interest rate cuts on way, signal MPC minutes

Reserve Bank of India (RBI) is likely to deliver more interest rate cuts in the months ahead to help accelerate economic expansion, potentially breaking ranks with price-focused peers in key developed markets, as fostering growth seemingly begins to outweigh inflation taming as an immediate priority for the Monetary Policy Committee (MPC).

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The RBI, which expects headline inflation projections to eventually ease into legally defined tramlines, would also use measures beyond policy rates to stimulate the economy, showed the MPC's latest minutes published Friday-exactly two weeks to the first review meeting in nearly five years to have reduced the benchmark rates.

«Given the macroeconomic outlook when inflation is expected to align with the target, and recognising that monetary policy is forward-looking, I view a lower policy rate to be more appropriate at the current juncture,» Governor Sanjay Malhotra wrote in the minutes of the February 7 MPC meeting-the first he chaired since taking office in December. A renewed growth emphasis of the rate-setting panel, which had focused on price stability and held rates for nearly two years, underscores the likelihood of a durable victory against inflation. «There is a need to preserve the high growth momentum, while maintaining price stability, necessitating monetary policy to use various policy instruments to maintain the inflation-growth balance,'' Malhotra said.