RBI minutes: all six MPC members backed the rate hike, two opposed the tougher stance

The Reserve Bank of India’s Monetary Policy Committee was unanimous on raising the repo rate, but not on how tough its message should be. The minutes of the 5-7 October meeting, published on rbi.org.in on 21 October, show all six members voting for a 25 basis point increase, which took the policy repo rate to 5.50%. The standing deposit facility rate is 5.25%, and the marginal standing facility rate and Bank Rate are 5.75%.

The committee also changed its stance from neutral to calibrated tightening. Nagesh Kumar and Ram Singh, who voted for the hike itself, wanted the neutral stance kept.

What the members said

Governor Sanjay Malhotra said the change in stance was essentially signalling that rate cuts are off the table in the near term. Future action, he indicated, can be a hike or a pause.

Deputy Governor Poonam Gupta backed the hike because headline inflation could reach the 6% upper tolerance limit. She wrote that “it is conceivable that a further increase in the policy rate might be needed”, depending on incoming data.

Saugata Bhattacharya said the totality of information pointed to “a strong economic case at this time for tightening monetary policy”.

Indranil Bhattacharyya, the RBI’s executive director on the panel, said it was better to set aside the “cautiousness bias” and act ahead of the curve.

Nagesh Kumar said that given continuing geopolitical and trade policy uncertainty, “a neutral stance remains appropriate”. He described inflation as driven by supply factors rather than overheating.

Ram Singh wrote: “I do not favour shifting the stance from neutral to tightening mode, as it may signal an extended cycle of rate hikes.” He also pointed to moderating growth.

The numbers behind the decision

• Inflation: The RBI projects consumer price inflation at 5.2% for 2026-27, up from 5.0% in the August policy. The quarterly path is 4.9% in July-September, 6.0% in October-December and 5.7% in January-March.
• Growth: Real GDP growth is projected at 7.1% for 2026-27, up from 6.7% earlier. The first quarter grew 7.8%.
• Latest data: CPI inflation rose to 4.8% in August from 4.5% in July, and core inflation was 4.2% in August.

The committee judged the risks to both growth and inflation to be evenly balanced.

What next

The next scheduled MPC meeting is on 2-4 December. Malhotra said the length of the tightening phase will depend on growth and inflation developments, especially underlying inflation, how widely price pressures are spreading, second-round effects of supply shocks, and demand.

For borrowers, a higher repo rate generally feeds into loans linked to external benchmarks, though the pace at which banks pass it on varies. This report is for information and is not investment or financial advice.