By Swati Bhat
MUMBAI (Reuters) -India’s interest-rate panel members have flagged room for future rate cuts as the country’s inflation outlook turns more benign, minutes of the October meeting showed on Wednesday.
The six-member monetary policy committee held the key repo rate steady at 5.50% earlier this month, after cutting rates by 100 basis points in 2025. It retained the “neutral” policy stance, though two members favoured a shift to “accommodative”.
“The benign outlook for headline and core inflation as a result of the downward revision of projections opens up policy space to further support growth,” RBI Governor Sanjay Malhotra wrote in the minutes.
While the intent is to continue to facilitate growth-enabling conditions, policy uncertainty, rapidly evolving developments and the foggy outlook suggest that the panel should take a view for each policy based on the prevailing macroeconomic conditions, he said.
India’s headline inflation fell to an eight-year low of 1.54% in September, driven by a sharp decline in food prices.
The central bank has revised its inflation forecast for 2025–26 to 2.6%, down from 3.1% in August and 3.7% in June.
It also raised the GDP growth forecast for the current fiscal year to 6.8% from 6.5%, citing strong private consumption, investment and resilient services activity.
Panel members warned that external headwinds, including U.S. tariffs and geopolitical tensions, could weigh on growth in the second half of the year.
“The acceleration in first-quarter growth has been underpinned by consumption and front-loading of government capex,” said external member Nagesh Kumar.
“Private investment remains sluggish…. perhaps due to the trade policy uncertainties.”
Kumar and Ram Singh voted to keep rates unchanged but called for a shift to an “accommodative” stance to signal readiness for future easing.
Singh said that the inflation trajectory looks benign for the next two quarters and argued that “the prevailing inflation rate is too low – it is neither conducive for businesses nor for public finances.”
Deputy Governor Poonam Gupta and other panel members supported a rate pause, citing the need to assess the transmission of previous rate cuts and the evolving global environment.
“Announcing a rate cut at this time may only be marginally effective,” Gupta wrote.
The government has announced fiscal measures to support growth, including goods and services tax rationalisation and easing of lending norms.
The next MPC meeting is scheduled for December 3–5, and economists expect the RBI to consider a rate cut.
(Reporting by Swati Bhat; Editing by Mrigank Dhaniwala)
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