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2d ago

RBI Minutes Signal Scope to Ease as Rates Held at 5.50% With Neutral Stance

An eight-year low in inflation creates policy space, with external tariff risks keeping easing on hold.

Japanese national flag hoisted atop of the Bank of Japan headquarters building is seen between traffic signals in Tokyo, Japan January 23, 2025. REUTERS/Issei Kato/File Photo
A drone view shows a container ship at a port in Zhoushan, Zhejiang province, China October 10, 2025. cnsphoto via REUTERS
A drone view shows the Central Bank headquarters building in Brasilia, Brazil, December 26, 2024. REUTERS/Ueslei Marcelino
A view of Tel Aviv, amid the ongoing conflict in Gaza between Israel and Hamas and cross-border hostilities between Hezbollah and Israel, in Israel, September 24, 2024. REUTERS/Amir Cohen

Overview

  • The Monetary Policy Committee left the repo rate unchanged at 5.50% and kept a neutral stance, with two members favoring a shift to accommodative to signal readiness to cut.
  • The RBI lowered its FY26 inflation projection to 2.6% and raised GDP growth to 6.8% after September CPI fell to 1.54%, the lowest in eight years.
  • Governor Sanjay Malhotra wrote that policy space exists to support growth but said a cut now would have limited impact as earlier 100 bps easing and fiscal steps continue to transmit.
  • Members cited U.S. tariffs and geopolitical uncertainty as headwinds that could soften second-half growth, even as the governor described the tariff impact as not a major concern for a largely domestic economy.
  • The next policy review is set for Dec. 3–5, and private forecasters see a possible 25 bps cut then if external risks do not worsen and incoming data stay benign.