The Reserve Bank of India’s (RBI) latest Monetary Policy Committee (MPC) minutes suggest policymakers see room to support growth while remaining vigilant on inflation, offering signals on the likely policy direction ahead of the formal April rate decision. The minutes record discussions held during the MPC’s 59th meeting from 4 to 6 February.
The document shows that all six members voted during the February meeting to keep the policy repo rate unchanged at 5.25 per cent and retain a neutral stance. However, the significance of the minutes lies less in the vote itself and more in the evolving narrative around growth, inflation and the external sector ahead of the upcoming policy review.
India’s real GDP is estimated to grow 7.4 per cent in 2025-26, according to the First Advance Estimates cited in the minutes, driven by private consumption and fixed investment. The RBI revised upwards its projections for the first two quarters of 2026-27 to 6.9 per cent and 7.0 per cent, respectively, reflecting stronger domestic demand and the anticipated impact of recently concluded trade agreements.
Governor Sanjay Malhotra said India’s macroeconomic fundamentals remain robust, with growth prospects looking up and inflation broadly stable. He indicated that the current policy rate was appropriate given the prevailing outlook.
Inflation remains a central theme in the deliberations. Headline CPI inflation stood at 0.7 per cent in November and 1.3 per cent in December 2025, remaining below the 4 per cent target. For 2025-26 as a whole, inflation is projected at 2.1 per cent. In the first half of 2026-27, CPI inflation is seen at 4.0 per cent in the first quarter and 4.2 per cent in the second quarter, largely due to base effects and higher precious metals prices.
Members repeatedly underscored that underlying inflation pressures remain muted when precious metals are excluded. Several noted that core inflation excluding gold has remained well below 4 per cent for multiple quarters, despite growth above 7 per cent.
The external environment was described as uncertain, with geopolitical tensions and global financial volatility posing risks. At the same time, the minutes highlight optimism around India’s recently concluded trade agreements with the European Union and the United States, which members said could strengthen exports, improve the current account and attract higher foreign investment.
Nagesh Kumar said improved sentiment following the trade deals had brightened the outlook, while cautioning that it was prudent to await new GDP and CPI series before recalibrating policy. Saugata Bhattacharya noted that although inflation is projected to edge up towards the target in early 2026-27, household inflation expectations remain anchored.
Notably, Ram Singh voted to keep the repo rate unchanged but favoured shifting the stance from neutral to accommodative, arguing that a growth-supportive signal would be consistent with stable inflation dynamics. Other members supported retaining flexibility amid global uncertainties.
Taken together, the minutes suggest the MPC views the growth-inflation configuration as favourable, with inflation contained and growth resilient. While the February discussions do not pre-judge the April decision, they indicate that policymakers see policy space emerging, contingent on incoming data and the new statistical series.
The next MPC meeting is scheduled for 6 to 8 April, when the RBI will formally announce its policy decision. |
