Rajan backed RBI committee's decision to keep rates on hold

India is gearing up to introduce a six-member monetary policy committee that would vote on interest rates, which has so far been decided solely by the RBI Governor. 

Reserve Bank of India (RBI) Governor Raghuram Rajan sided with three of the five members of a technical advisory committee who recommended the central bank leave interest rates on hold at its June 7 policy review, according to minutes released on Tuesday.

The three members said the RBI should wait for inflation to ease further, monitor the progress of monsoon rains and get further clarity on the U.S. Federal Reserve's actions -- arguments Rajan also put forward in deciding to leave the policy repo rate on hold this month.

But two members recommended the RBI cut rates by 25 basis points, citing room to provide monetary stimulus to the economy and confidence a good monsoon would keep food prices in check, among other arguments.

The committee submits their feedback through e-mail and their recommendations are only for consultative purposes.

India is gearing up to introduce a six-member monetary policy committee that would vote on interest rates, which has so far been decided solely by the RBI Governor. 

The committee could be in place by the next policy review scheduled for early August, government officials have said.

That review would be the last one for Rajan, who said this month he would step down by September.