A dove lands

4 October 2016 By Una Galani Follow @ugalani

The Indian central bank’s monetary policy committee, led by new Governor Urjit Patel, has cut rates. There are decent reasons for the unanimous decision. Nonetheless, it will do little to calm those who fear the departure of Raghuram Rajan has made the RBI less independent.

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The Reserve Bank of India decided on Oct. 4 to cut the main policy rate by 25 basis points to 6.25 percent.

It was the first time the bank’s six-member monetary policy committee (MPC) set the interest rate. Previously the governor alone made the decision. The policy meeting will also mark the first public appearance by Urjit Patel since he became governor on Sept. 4.

The RBI's primary mandate is to target "price stability while keeping in mind the objective of growth".

Consumer price inflation fell to 5.05 percent in August from 6.07 percent in July. The RBI has a target to bring inflation down to 5 percent by March 2017.

A Reuters poll published on Sept. 30 showed that just over half of 44 analysts surveyed expected the MPC to leave rates unchanged.

India's GDP growth slowed to 7.1 percent in the three months to June, down from 7.9 percent in the previous quarter.

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