Mumbai: The Reserve Bank of India (RBI) is adopting a wait-and-watch approach before making any further change to the policy rate, according to the latest Monetary Policy Committee (MPC) meeting minutes.
RBI Governor Sanjay Malhotra indicated that greater clarity on the inflation outlook would be needed before any recalibration of the policy rate.
RBI Watches Inflation Closely
Malhotra said he would prefer to wait for more certainty on how inflation develops, including whether recent inflation readings persist, how forecasts change and the level at which inflation eventually settles.
The Governor said elevated inflation is largely being driven by supply-side shocks, while there are limited signs of price pressures becoming broad-based.
However, he cautioned that higher food, fuel and other input costs could spread across the economy and affect inflation expectations. Evidence of such risks becoming stronger could require monetary policy tightening.
Economy Remains Resilient
MPC member Nagesh Kumar said the Indian economy has remained resilient despite challenges from the West Asia conflict, volatile crude oil prices, trade uncertainties and El Nino-related risks to the monsoon.
Indranil Bhattacharyya said high-frequency indicators and early corporate results point to sustained momentum in industrial and services activity during the first quarter.
Investment activity also remained strong, supported by capital goods production, credit growth and the government’s continued focus on capital expenditure. Strong goods and services exports helped cushion elevated imports.
Growth Outlook Shows Strength
Poonam Gupta noted that global uncertainties increased again in July after easing somewhat in June. However, improved rainfall distribution and resilient domestic indicators continued to support India’s growth momentum.
She said economic growth during the year could turn out slightly better than projected in the June policy, while inflation could be marginally lower.
Other MPC members also highlighted uncertainty around inflation and growth. Saugata Bhattacharya pointed to global market volatility and changing policy expectations, while Ram Singh stressed that India’s inflation trajectory requires close monitoring.
The minutes indicate that policymakers remain cautious, balancing resilient domestic growth against inflation risks before considering the next policy rate move.
