October MPC minutes: Rate cuts off table as members flag rising inflation
The Reserve Bank of India's Monetary Policy Committee has signaled that interest rate cuts are unlikely in the near term due to rising inflation concerns. Members are worried about inflation spreading beyond food and fuel, leading to a shift toward a 'calibrated tightening' policy stance.
Why it matters
This decision impacts borrowing costs and economic growth projections for India, reflecting global trends in central bank monetary policy.
With headline inflation projected to touch the upper tolerance limit of 6 per cent in the third quarter of the current financial year, the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) has signalled that rate cuts are off the table in the near term. Minutes of its October meeting, released on Wednesday, show members increasingly concerned about inflation spreading beyond food and fuel. While all six members voted for a 25-basis-point hike in the repo rate to 5.50 per cent, Nagesh Kumar and Ram Singh opposed the shift in the monetary policy stance from neutral to calibrated tightening. The minutes of the October 5-7 meeting show that the change in stance was intended to signal a shift in the policy outlook.
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