The Reserve Bank of India's Monetary Policy Committee (MPC) has adopted a 'wait-and-watch' approach amid uncertainties surrounding growth and inflation, according to the minutes of its latest meeting released on Friday. Governor Sanjay Malhotra, who chairs the committee, along with the five other members, voted unanimously to keep the benchmark interest rates unchanged at 5.25 per cent.
Unanimous Decision to Hold Rates
The minutes, published on June 19, 2026, revealed that all six members of the MPC were in favor of maintaining the status quo on the repo rate. This decision comes as the committee navigates a complex economic landscape marked by mixed signals on growth and persistent inflationary pressures.
Governor Malhotra emphasized the need for a cautious approach, stating that the committee would closely monitor incoming data before making any policy adjustments. The MPC noted that while inflation has shown some signs of moderation, risks remain elevated due to global commodity price volatility and supply chain disruptions.
Growth Outlook Remains Fragile
On the growth front, the MPC acknowledged that the Indian economy is recovering but at an uneven pace. Domestic demand has been supported by robust services activity, but the manufacturing sector continues to face headwinds from weak external demand and input cost pressures. The committee underscored the importance of sustaining policy support to nurture the recovery.
The minutes also highlighted that the MPC remains vigilant about the impact of global economic developments, including monetary policy tightening by advanced economies and geopolitical tensions. These factors could pose risks to capital flows and the exchange rate, which in turn may affect domestic inflation.
Market Reaction and Forward Guidance
Financial markets had largely anticipated the hold decision, given the prevailing uncertainties. Bond yields remained stable following the release of the minutes, while the rupee traded in a narrow range. Analysts expect the RBI to maintain a neutral stance in the near term, with a possible rate cut later in the year if inflation continues to ease.
The next MPC meeting is scheduled for August 2026, where the committee will reassess the economic outlook. Until then, the 'wait-and-watch' approach is likely to persist as policymakers seek more clarity on the trajectory of growth and inflation.
