The Reserve Bank of India’s minutes show price increases reaching a wider share of the consumer basket, as policymakers weighed whether stronger inflation calls for a tighter signal despite potential costs to growth.
At its Oct. 5-7 meeting, the six-member Monetary Policy Committee (MPC) voted to raise the policy repo rate by 25 basis points to 5.50%. Four members supported shifting the stance from neutral to calibrated tightening; MPC members Nagesh Kumar and Ram Singh favored leaving it unchanged, according to minutes released Oct. 21. The difference concerned the policy signal: every member backed the rate increase.
Consumer Price Index (CPI) inflation rose to 4.8% in August from 4.5% in July. Core inflation was 4.2%, while the measure excluding precious metals was 2.9%. The share of basket items with inflation above 4% reached about 37% in August, up from 20% in March.
RBI Governor Sanjay Malhotra pointed to the broader spread of price increases. For fiscal 2026-27, the central bank projected CPI inflation of 5.2%, including 6.0% in the third quarter and 5.7% in the fourth. It forecast core inflation at 4.4% for the fiscal year. These are projections, not recorded inflation rates.
The RBI cited a deficient south-west monsoon, El Niño conditions and high energy and commodity prices as risks, saying those costs were still feeding through to prices. Deputy Governor Poonam Gupta urged policymakers to account for the time it takes decisions to affect inflation, saying monetary policy “works with a lag.” She argued the committee should act before waiting for clearer proof that price pressures had spread further.
Kumar said inflation was largely supply-driven and did not point to an overheating economy. Singh warned that signaling a prolonged series of rate increases could weaken demand in areas such as vehicles and real estate, and restrain business investment. The minutes record that division, also covered in EconoTimes’ earlier report on the two members’ preference for a neutral stance.
The RBI said its calibrated-tightening stance rules out rate cuts in the near term, while leaving a pause or another increase as possible next steps. It said future decisions would depend on growth and inflation developments. Policymakers are due to meet again Dec. 2-4.
