New RBI MPC External Members To Be Announced By Oct. 1 — Profit Exclusive

The Indian government is likely to announce new external members of the Monetary Policy Committee or MPC under the Reserve Bank of India by Tuesday, ahead of the crucial policy meeting, people privy to the development said.

"Names of the external members have been finalised and the policy meeting will be held within time with new external members, people familiar with the matter told NDTV Profit. Without divulging further details, the source said that new members will be renowned and experienced economists.

The upcoming MPC meeting is important as it will indicate on the interest rate cut amid ease of liquidity conditions globally. However, RBI governor Shaktikanta Das has repeatedly said that they are not considering rate cut as the central bank is watching inflation to be well within the target band of 4-6 per cent.

Experts are of view that new panel would need some time before taking a call on the rate cut so any decision with this regard is ruled out at least in the October meeting.

The four-year term of three external members—Ashima Goyal, Jayanth Varma and Shashank Bhide—is coming to an end on Oct. 4.

The next meeting of MPC is scheduled for Oct. 7 to Oct. 9.

A selection panel—led by RBI Governor Das, Cabinet Secretary TV Somanathan and Economic Affairs Secretary Ajay Seth—decides the external MPC members. While Prime Minister Narendra Modi gives the final nod on the chosen candidates.

Early this month, RBI Governor Shaktikanta Das said that the meeting of the MPC—scheduled to take place from Oct. 7—can only take place when the members are in place.

"New members obviously have to be appointed, then only we can hold the meeting. It should happen. We expect the new members to be in place in time," the governor said.

The MPC is chaired by the governor and has six members. The RBI has three representatives, including the governor, while the other three are external members.

Notbaly, before the MPC was appointed in 2016, the RBI governor were deciding on the interest rates.

While the RBI's global counterparts like the US Federal Reserve and the People's Bank of China have begun their rate cut cycle, Das maintained his stance that domestic cues will have to be continuously monitored.

The RBI will cut rates twice over the course of the fiscal, with a possibility of the first cut in October at the earliest, global ratings agency, S&P Ratings said earlier.

"GDP growth moderated in the June quarter as high interest rates temper urban demand, in line with our projection of 6.8% growth for the fiscal 2024-25," it said.

However, the RBI continues to consider food inflation a hurdle for rate cuts. "It reckons that unless there is a lasting and meaningful decline in the rate at which food prices are increasing, it will be tough to maintain headline inflation at 4%," the rating agency said.

The central bank has maintained its benchmark interest rate at 6.5% since February 2023 to balance inflation control with economic growth.