MUMBAI — The Reserve Bank of India (RBI) has warned of widening inflationary pressures, indicating that interest-rate cuts may remain unlikely in the near term.
According to the minutes of the Monetary Policy Committee’s October meeting, Governor Sanjay Malhotra highlighted the need to monitor underlying inflation, the spread of price pressures and the effects of supply disruptions.
The committee unanimously raised the policy repo rate by 25 basis points to 5.50 per cent at its October 5–7 meeting. It also shifted its policy stance to calibrated tightening.
The RBI raised its inflation projection for the 2026–27 financial year to 5.2 per cent from its earlier estimate of 5 per cent. Core inflation, which excludes the more volatile components of food and fuel, was projected at 4.4 per cent.
Food prices, energy costs, deficient rainfall and geopolitical uncertainty were among the factors contributing to inflation concerns.
However, members differed over how long tighter monetary policy might be needed. Some supported a more cautious stance because price pressures could persist, while others warned that prolonged tightening could weaken investment and economic growth.
The RBI’s future decisions will depend on incoming inflation and growth data. Higher interest rates can help contain price pressures, but they can also increase borrowing costs for households and businesses.
The developments matter for borrowers, savers and businesses as India balances price stability with economic growth.
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