High-frequency indicators suggest the Indian economy is likely to maintain strong growth in Q2, according to the Reserve Bank of India’s Monetary Policy Committee (MPC) minutes released on October 15.
RBI Governor Sanjay Malhotra noted that while current growth is strong, the outlook is softer than the central bank’s aspirations. He highlighted that benign headline and core inflation, alongside cumulative fiscal and monetary measures, provide scope to support growth further.
However, Malhotra emphasised that it is not the opportune time to cut policy rates, as such a move may not deliver the desired impact. He preferred to retain the neutral stance, citing evolving policy uncertainties and a rapidly changing macroeconomic environment.
MPC member Ram Singh said the case for another rate cut has strengthened since the August meeting, given low CPI and Q2 growth resilience. Yet, he noted that October’s pause reflects earlier easing measures still filtering through the system.
Singh also observed that inflation may breach the 4% target in FY27 due to base effects and demand-side pressures.
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Poonam Gupta said the economy remains resilient, poised for 6.5–7% growth this year and next. She noted that lower, steadier inflation and rationalised GST rates provide some space for potential rate cuts, but global uncertainties and marginal effectiveness at this juncture argue against immediate action.
The minutes underline the MPC’s intent to continue fostering growth-enabling conditions while exercising caution amid policy and external uncertainties.
