Of the three new external members appointed by the government on Tuesday to the Reserve Bank of India’s Monetary Policy Committee (MPC), at least one of them, Saugata Bhattacharya, former Axis Bank chief economist, is a dove who had strongly argued for interest rate cuts in mid-August, Nomura Securities economists said on Wednesday. 

Nomura economists Sonal Varma and Aurodeep Nandi reiterated their non-consensus call that the Indian central bank could start cutting interest rates with a 25 basis point reduction as early as next week, when the reformulated MPC meets for the first time, and cut interest rates by 1 percentage point through this cycle. Their view is based on an assessment that “both growth and inflation have already surprised to the downside, and high-frequency data are showing further signs of growth weakness”.

Apart from Mr. Bhattacharya, the other two new MPC members — Delhi School of Economics director Ram Singh and the Institute for Studies in Industrial Development director and chief executive Nagesh Kumar — are more neutral and balanced, rather than hawkish, the economists noted.