The Reserve Bank of India on Wednesday released the minutes of its Monetary Policy Committee (MPC) meeting held on October 5-7, at which the committee unanimously raised the policy repo rate by 25 basis points to 5.50 per cent and changed its stance to calibrated tightening, Nation Press reported.
Source: Nation Press
Governor Sanjay Malhotra said rate cuts were off the table for now and that the duration and extent of any further hikes would depend on growth-inflation developments, especially underlying inflation, ANI reported via Daily Prabhat. Headline inflation is projected to reach 6.0 per cent in the third quarter of FY2026-27 before moderating to 5.7 per cent in the fourth quarter, with the full-year forecast raised to 5.2 per cent, while real GDP growth for FY27 was projected at 7.1 per cent.
MPC member Ram Singh warned that retail inflation was expected to average almost 5.8 per cent over the next three quarters, approaching the upper limit of the RBI's tolerance band, Upstox reported from the minutes. 'At the current repo rate level, the projected inflation trajectory will render the real rate negative, generating perverse saving-consumption trade-offs,' Singh said. He noted the RBI's September household survey showed median inflation expectations for the next three months had jumped to 9.9 per cent.
Members also flagged firms passing higher input costs on to consumers. External member Saugata Bhattacharya said input prices in wholesale indices had been rising at close to 9 per cent year-on-year and that enterprise surveys suggested those costs were being passed on, while RBI executive director Indranil Bhattacharyya pointed to pass-through in segments including restaurants and cooked meals, Upstox reported.
The minutes showed all six members backed the rate hike, but Nagesh Kumar and Ram Singh favoured retaining a neutral stance rather than shifting to calibrated tightening, ANI reported. The MPC next meets on December 2-4.
Sources: Nation Press, ANI via Daily Prabhat, Upstox, Finimize (Reuters).