RBI MPC Minutes: Governor Sanjay Malhotra flags tariff concerns, stresses need for policy vigilance

The Reserve Financial institution of India (RBI) is staying cautious on rate of interest modifications, with Governor Sanjay Malhotra warning of persistent international uncertainties—significantly round tariffs—that might disrupt financial momentum.

Within the Financial Coverage Committee (MPC) assembly held from August 4 to six, the RBI determined to maintain the repo charge unchanged at 5.5 per cent. Minutes from the assembly, launched Wednesday, present unanimous help from all six MPC members, together with the Governor, for a established order on charges.

Malhotra famous that whereas India’s financial fundamentals stay robust, the central financial institution should proceed monitoring exterior dangers. “The uncertainty over tariffs continues to be evolving,” he mentioned, hinting at potential implications from international commerce tensions, together with these stemming from renewed tariff threats by former US President Donald Trump.

Regardless of these issues, Malhotra expressed confidence in India’s medium-term outlook, citing the nation’s inherent strengths, strong macroeconomic buffers, and supportive coverage atmosphere. He added that the coordinated instruments on the RBI’s disposal are serving to transmit financial easing successfully into the monetary system.

The Governor additionally pointed to anticipated enchancment in city demand, particularly through the upcoming festive season, at the same time as international demand and commerce headwinds stay a drag on progress.

Exterior member Ram Singh highlighted a sequence of positives for India’s progress trajectory, together with robust PMI knowledge, wholesome non-public capital inflows, a great monsoon, rising capability utilisation, and festive-led consumption. Nonetheless, he additionally warned of “stress indicators” in some sectors that might restrict how far the financial system can outperform.

The RBI stored its GDP progress forecast for FY26 regular at 6.5 per cent, reflecting confidence within the home financial system’s resilience. In the meantime, the central financial institution revised its inflation forecast downward to three.1 per cent, from an earlier projection of three.7 per cent—thanks largely to softer meals costs.

Exterior member Nagesh Kumar summed up the temper of the committee, saying that whereas there may be room to spice up non-public demand and funding, the MPC will probably “wait and watch” how present measures play out earlier than deciding any strikes within the October coverage assembly.