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Minutes of the Monetary Policy Committee (MPC) meeting were released by the Reserve Bank of India (RBI), highlighting views on inflation and growth recovery.
Inflation and Growth
Nagesh Kumar and Ram Singh, external MPC members, advocated for a rate cut to support growth.
Inflation: Largely due to food prices, which have a significant weight in the Consumer Price Index (CPI).
Inflation is expected to ease as vegetable prices decrease.
Monetary policy can address demand-side inflation but has limited control over supply-side shocks like the rise in vegetable prices.
While inflation is elevated, it is expected to soften in the last quarter of FY25.
RBI Deputy Michael Patra suggested that a durable reduction in inflation is necessary to sustain growth in the long term.
Private investment needs a boost in domestic demand to recover, as external export conditions are challenging.
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