India Lowers Rates in Patel's First Policy Decision

The Reserve Bank of India (RBI) surprised the market by cutting interest rates by 25 basis points in Governor Urjit Patel's first monetary policy decision. This marks the first decision by the newly formed Monetary Policy Committee (MPC), which unanimously voted for the cut. The RBI expects GDP growth to be around 7.6% and inflation to remain stable at 5%. The decision aligns with the current economic environment, where inflation has decreased, and the US Federal Reserve has not raised rates. This shift represents a significant change from the previous administration under Raghu Rajan, as the MPC now includes six members, three from the RBI and three appointed by the government.

What does the continuity message from the Reserve Bank of India regarding inflation imply?

How does the new Monetary Policy Committee differ from the previous decision-making structure at the Reserve Bank of India?