Minutes of the RBI’s October 5 to 7 meeting show all six members backed a 25 basis point hike to 5.50%, while two opposed the shift to calibrated tightening. The governor said rate cuts are off the table.
What the October MPC Minutes Reveal
The Reserve Bank of India released the minutes of its Monetary Policy Committee (MPC) meeting on Wednesday, October 21, two weeks after the rate decision. All six members voted to raise the repo rate by 25 basis points to 5.50%, which was the first increase since February 2023. The disagreement was about the policy stance. Nagesh Kumar and Ram Singh wanted to keep it neutral, while the other four members backed a move to calibrated tightening.
Governor Sanjay Malhotra said the stance change was meant to signal that rate cuts are unlikely in the near term, which leaves a hike or a pause as the possible next moves. He added that the length and extent of any tightening would depend on underlying inflation, the spread of price pressures and the second-round effects of the supply shock.
Member-by-Member Positions
| Member | Position recorded in the minutes |
| Sanjay Malhotra, Governor | Said calibrated tightening means rate cuts are off the table in the near term |
| Poonam Gupta, Deputy Governor | Proposed the stance change and said the MPC could not wait for definitive proof of second-round effects |
| Saugata Bhattacharya | Said price pressures were getting entrenched, but warned against a rapid rise in rates |
| Indranil Bhattacharyya | Urged the MPC to act pre-emptively and move away from a bias toward caution |
| Ram Singh | Dissented on the stance and preferred gradual, moderate rate increases |
| Nagesh Kumar | Dissented on the stance and said a neutral stance remained appropriate |
The Inflation Numbers Behind the Hike
The case for tightening rested on a change in the inflation outlook. Headline consumer price inflation rose to 4.8% in August from 4.5% in July, and core inflation increased to 4.2%. The MPC projected inflation at 5.2% for 2026-27, with the third quarter expected to touch 6%, the upper end of the RBI’s tolerance band. The committee also raised its growth forecast for 2026-27 by 40 basis points to 7.1%.
Individual members pointed to other indicators. Saugata Bhattacharya cited wholesale input prices rising close to 9% and the pass-through of higher costs to consumers. Ram Singh referred to the RBI’s September household survey, in which the median three-month-ahead inflation expectation rose to 9.9%. He warned that the real repo rate, which is the policy rate minus inflation, could turn negative under the projected inflation path.
How the Hawks and the Dissenters Argued
Poonam Gupta argued that inflation was largely driven by external supply shocks and showed limited signs of becoming entrenched. She said the MPC could not wait for definitive evidence, because monetary policy works with a lag. Referring to the post-pandemic inflation-targeting period, she said the MPC had acted whenever inflation reached the tolerance limits, which helped preserve the credibility of the framework. She added that a further increase in the policy rate might be needed, depending on incoming data.
Nagesh Kumar took the opposite view of the stance. He said inflation was driven largely by supply-side factors with little sign of overheating or a broad-based rise in prices, though he agreed that inflation expectations had to be managed. Ram Singh warned that signalling a prolonged tightening cycle could hurt demand in interest-rate-sensitive sectors and drag on the recent momentum in private investment.
Saugata Bhattacharya also cautioned that domestic financial conditions had already tightened significantly, and that rapid adjustments could constrain growth and the growth-led capital flows India relies on. He flagged the importance of keeping an interest-rate gap with the G7 economies to attract debt flows.
Global Risks and the Next Meeting
The minutes list renewed tensions in West Asia, volatile crude oil prices and the US Federal Reserve’s 25 basis point hike in September among the global uncertainties, along with elevated global bond yields. The MPC’s next meeting is scheduled for December 2 to 4. By then members will have two more inflation readings and a clearer view of how much of the supply shock is feeding through to domestic prices.
Bond markets are already looking ahead. Business Standard reported on October 21 that bets on a 50 basis point increase in December are growing, and that the benchmark 10-year government bond yield has risen around 20 basis points since the policy announcement.
