India20 Aug

RBI MPC Minutes Show Hawkish Stance, Possible Rate Hike if Inflation Risks Materialize

Minutes from the RBI's Monetary Policy Committee meeting, released Wednesday, showed members were more hawkish than the August policy suggested. Several flagged the possibility of a rate hike or recalibration if inflation risks materialize, with Governor Sanjay Malhotra saying higher inflation could warrant a change in policy rate.

The Reserve Bank of India released minutes of the Monetary Policy Committee (MPC) meeting on Wednesday, two weeks after the meeting concluded. The minutes showed members were more hawkish than the August policy had indicated, with several flagging the possibility of a rate hike or recalibration if inflation risks materialize.

RBI Governor Sanjay Malhotra said that higher headline and core inflation could warrant a recalibration of the policy rate. He noted that inflation was rising and would peak in Q3 before moderating to an average of 5% in 2026-27. Food and fuel supply shocks drove headline inflation, while core inflation remained modest and expectations were contained.

The minutes stated that headline inflation has averaged 3.9% so far, while core inflation was projected at 4.3%. Malhotra added that the economy outperformed expectations.

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