RBI external committee called for rate cuts at June review

Mumbai: All members of the Reserve Bank of India's seven-member external committee recommended the central bank to cut interest rates at its June 2 review, with most recommending the 25 basis points cut that was announced by Governor Raghuram Rajan.

Minutes released from the RBI on Tuesday showed four members had called for a 25 bps rate cut ahead of that review, saying sharply easing inflation allowed the central bank to focus on supporting the domestic economy.

Two members suggested a 50 bps cut, noting in part that India's policy rates were among the highest in the world relative to inflation, leaving the country vulnerable to volatile inflows from overseas investors.

A single member recommended a 75 bps rate cut to lower the cost of capital.

The recommendations of the external committee are not binding.

The RBI on June 2 announced it would cut interest rates by 25 bps - bringing its total easing so far in 2015 to 75 bps - and said further action would hinge on the trajectory of inflation during the monsoon rains.