RBI Minutes Signal More Rate Hikes, Panel Split on Tightening Pace

Reserve Bank of India policymakers indicated further rate hikes may be needed to curb inflation but stopped short of endorsing an aggressive tightening cycle, minutes released Wednesday showed. The Monetary Policy Committee unanimously raised the repo rate by 25 basis points to 5.50% earlier this month, its first hike in nearly four years, and shifted its stance to "calibrated tightening" from "neutral." Governor Sanjay Malhotra cited "increasing signs of generalisation of inflation." Domestic retail inflation accelerated to a higher-than-expected 5.54% in September, approaching the central bank's 6% tolerance ceiling. The RBI expects inflation to average 6% in the October-December quarter and raised its full-year forecast to 5.2% from 5%, while lifting its growth forecast by 40 basis points to 7.1%. Panel members differed on the depth of tightening. Barclays forecasts two more hikes this cycle, Goldman Sachs at least three through June 2027, and HSBC a 50-basis-point increase in December. Members Nagesh Kumar and Ram Singh opposed the stance change, with Singh warning against "high-for-long rates."