RBI MPC minutes reveal two members opposed the shift from neutral stance to calibrated tightening in October's meeting
At its October monetary policy meeting, the Reserve Bank of India (RBI) raised the repo rate by 25 basis points to 5.50%, marking the first hike in nearly three years. RBI Governor Sanjay Malhotra also announced a shift in the monetary policy committee's stance from neutral to calibrated tightening.
While all six MPC members unanimously voted to raise the repo rate by 25 bps as anticipated by the industry, Nagesh Kumar and Ram Singh opposed the shift in stance, the RBI MPC minutes revealed on Wednesday.
“Two members - Dr. Nagesh Kumar and Prof. Ram Singh - were of the view that the stance be retained at neutral,” the release read.
Meanwhile, Malhotra supported shifting the MPC’s stance towards calibrated tightening, citing rising inflationary pressures. He said that headline CPI is projected to touch the upper tolerance band in the third quarter and remain significantly above 5% in the following two quarters.
He also noted that underlying inflation is expected to move above the target in the coming months. “Considering the above growth-inflation dynamics, I consider it appropriate to recalibrate the policy rate. Accordingly, I vote for a 25-bps hike in the policy rate,” Malhotra said.
Although both Kumar and Singh supported the 25-basis-point repo rate hike, they disagreed with moving from a neutral to a tightening stance.
Kumar said: “In view of the continued geopolitical and trade policy uncertainties, I feel that a neutral stance remains appropriate.”
Singh, on the other hand, noted: “I do not favour shifting the stance from neutral to tightening mode, as it may signal an extended cycle of rate hikes." He also cautioned that expectations of significant rate hikes could hurt demand in interest-rate-sensitive sectors and private investment.
The other four members, Saugata Bhattacharya, Indranil Bhattacharyya, Poonam Gupta and Sanjay Malhotra, backed both the repo rate hike and the shift to calibrated tightening from a neutral stance.
The RBI minutes also suggest that a rate hike or a pause are the only near-term options, as the monetary policy committee grows increasingly concerned about inflation spreading beyond food and fuel. This aligns with industry expectations even before the October meeting took place.
“Rate cuts are off the table in the near term and policy action ahead can only be a rate hike or a pause, depending on the evolving conditions and the outlook,” the RBI MPC said in the release.
The committee raised its FY2027 CPI inflation forecast to 5.2% from 5% in August, while revising its GDP growth projection upwards to 7.1% from 6.7%. Inflation is projected to rise to 6% in the third quarter before easing to 5.7% in the fourth quarter, amid supply-side pressures from a deficient monsoon, ongoing El Nino conditions and elevated energy and commodity prices.
“Furthermore, continuing momentum in services and broadly stable employment conditions are likely to support urban demand. Strong capacity utilisation, robust credit flows and the government’s thrust on infrastructure are expected to sustain investment activity,” RBI noted.
The central bank also expects services exports to remain buoyant, while bilateral trade agreements are expected to boost merchandise exports. The next MPC meeting is scheduled for December 2-4, 2026.
Eshita Gain is a digital journalist at Mint, where she joined in May 2025. She writes on corporate developments, personal finance, markets, and business trends, with a focus on delivering timely and relevant stories to a broad audience. <br><br> While her core beat lies in business and finance, she is not confined to a single niche and frequently explores stories across domains, including international relations and policy developments. <br><br> She holds a postgraduate diploma in business and financial journalism by Bloomberg from the Asian College of Journalism (ACJ), Chennai. During her time there, she received rigorous training in tracking financial data, interpreting corporate filings, and reporting on business developments. She has pursued her graduation from St. Joseph’s University, Bengaluru in a multi-disciplinary course. Her majors included Journalism, International Relations, peace and conflict studies. <br><br> Eshita has previously worked in digital marketing, which enables her to write SEO friendly copies that are clear and engaging. <br><br> Her primary interest lies in breaking down complex subjects and writing clear, accessible copies that inform readers. She aims to bridge the gap between technical financial language and everyday understanding. Outside the newsroom, Eshita enjoys reading non-fiction, and exploring new places, constantly seeking fresh perspectives and stories beyond headlines.
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