According to persons with knowledge of the situation, India's government plans to appoint new foreign members to the monetary policy committee of the central bank by October at the latest. This appointment comes just before an important meeting where the Monetary Policy Committee (MPC) is expected to be under pressure to lower interest rates.
As per the people who asked not to be named because the talks are private, the selection panel, which consists of government officials and the governor of the Reserve Bank of India, will suggest likely candidates in the next two weeks. An announcement is expected by the end of September or the beginning of October.
Governor Shaktikanta Das leads the six-member MPC, which consists of three external members and three RBI personnel. The external members are appointed for a four-year term and are often well-known economists with academic credentials or experts in finance and macroeconomics. Ashima Goyal, Shashanka Bhide, and Jayanth Varma are three external members whose mandates expire on October 4. On October 9, the next scheduled rate decision is due.
Das, Cabinet Secretary T.V. Somanathan, Secretary of Economic Affairs Ajay Seth, and other officials make up the six-member selection panel. They must prevent a repeat of 2020, when the RBI's scheduled rate meeting had to be postponed due to a delay in the appointment of the external MPC members. Analysts criticized that at the time and it increased policy uncertainty. Requests for information were not instantly answered by representatives of the RBI or the Ministry of Finance.
A change in global central bank policy is the backdrop for the appointment of a new MPC. It is anticipated that the Federal Reserve may lower interest rates as early as September, which will compel other central banks to intervene to calm the markets. The Philippines and New Zealand have previously lowered interest rates in the Asia-Pacific region.
More than eighteen months have passed since the RBI last raised its benchmark interest rate, and Das is unwilling to loosen policy until inflation approaches the central bank's 4 percent objective. At the August policy meeting, Varma and Goyal, two of the current external members, had cast votes in favor of rate decreases.
The majority of analysts believe that the Reserve Bank of India won't reduce borrowing prices until the latter quarter of this year and that it will probably wait to act until the Fed makes a change in direction. Some argue that lower interest rates are necessary to promote economic expansion since there are indications that consumer demand is declining.
The government's revision of the consumer price index, which might result in a significant reduction in the weighting of food, coincides with the MPC's reorganization. This action could potentially mitigate future spikes in inflation in India. In March 2026, the RBI will review its inflation targeting framework. There is a growing discussion among officials on whether food prices should be exempt from the objective.
