Navigating Between Rates, Liquidity and Electoral Politics: An in-Depth Analysis of Monetary Policy Committee


The Monetary Policy Committee (MPC) has been caught in an interesting tri-junction of convenience: balancing between rate hikes, liquidity and coming elections. While there is a consensus that the MPC will opt for a 25-bps rate hike, there have been murmurs of even an unconventional 15-20 bps rate hike. However, such a decision is far from easy, as there is dissent within the MPC on the actual policy direction, while economic recovery still appears to be in its nascent stage. Aside from this matter, the MPC is also trying to manage political pressure brought on by upcoming state elections. Businesses are also beginning to feel the heat of price hikes, as inflation measurements continue to surge.

At the same time, it is still too early to jump the gun and gauge how the rising petrol prices will turn out for India. Hence, MPC is finding itself at an interesting conundrum, where it must find a way to play it safe and ensure that the domestic economy does not suffer a setback. It is clear that such a decision will require the kind of balance only a mastermind can pull off.

The person mentioned in the article is the governor of Reserve Bank of India (RBI), Urjit Patel. He is the 24th and current Governor of the RBI. He is a well-known economist who served as a Deputy Governor of the Central Bank between 2013-2016. He currently serves as a leader of a six-member panel – the MPC established in 2016. He is in charge of formulation of monetary policy and setting of interest rates, depending on the inflationary trends of the Indian economy.

The company mentioned in the article is Reserve Bank of India (RBI). It is the central banking institution in India and part of the larger system of the Reserve Bank of India Financial Services. The primary purpose of RBI is to maintain monetary stability in India and to ensure the financial stability of the country’s banking and financial system. The RBI and its Governor play a major role in determining monetary policy and offers tremendous insight into the Indian economy and its financial instruments.