Mumbai: Hardening domestic fuel prices are likely to weigh on the Reserve Bank of India’s (RBI) rate setting panel at its 3-day meet beginning 4 June, the central bank said.

This is the first time that the Monetary Policy Committee (MPC) will meet for three days due to “administrative exigencies". In the normal course, it meets every two months for two-days before making public its monetary policy stance.

“The MPC will meet on 4-6 June for the Second Bi-monthly Monetary Policy Statement for 2018-19. The resolution of the MPC will be placed on the website at 2.30pm on 6 June," RBI said in a statement. The MPC was originally scheduled to meet on 5 June, but the meeting has been advanced by a day.

The monetary policy review will take into account the retail inflation, which rose to a 4-month high of 3.18% in April mainly on account of increasing prices of petrol and diesel. RBI mainly factors in retail inflation, based on the Consumer Price Index (CPI), while deciding the key interest rate.

The domestic retail petrol and diesel prices are at all time high on account of rise in crude oil prices in international market. High petrol and diesel prices can further fuel inflationary expectations.

At the 4-5 April MPC meeting, RBI deputy governor and member Viral Acharya had cited revival in investment activity and an improvement in capacity utilisation for his switch from a neutral stance to shift “decisively to vote for a beginning of withdrawal of accommodation in the next monetary policy meeting in June".

A majority of the six-member panel had flagged upside risks to inflation as it kept the benchmark repurchase rate unchanged at 6%.

The MPC was set up by amending the Reserve Bank of India Act, 1934, through the Finance Act 2016. The first meeting of the MPC was held in October 2016. Prior to setting up of the MPC, the RBI Governor used to decide the interest rate.

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