Inflation remains top of mind, MPC minutes show
RBI's monetary policy committee has increased the benchmark repo rate by 25 basis points due to inflation concerns. Core inflation has shown an upward trajectory, indicating a normalization from earlier benign levels. Various members expressed views on external supply shocks impacting inflation expectations and the need for timely policy adjustments. The differing opinions highlight the…
Inflation remained the primary concern during the monetary policy meeting as the MPC increased the benchmark repo rate by 25 basis points to 5.50%. Governor Sanjay Malhotra highlighted growing signs of generalised inflation, with 37% of commodities in the basket exceeding 4% in August, up from 20% in March. Core inflation, which excludes precious metals, rose to 4.2% in August, the first time it has moved above the target of 4% in over a year.
The MPC decided to adopt a calibrated tightening stance, indicating that rate cuts are not in the near term. Deputy Governor Poonam Gupta attributed inflation to external supply-side shocks, warning that headline inflation could reach 6%. External members Nagesh Kumar and Ram Singh argued for maintaining a neutral stance due to geopolitical uncertainties and rising crude and metals prices.
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