Not The Opportune Time To Cut Rates" Says RBI GOV In Oct Policy

MUMBAI: With inflation benign and growth remaining weak, there is policy space for a further rate cut but the timing is not opportune and would not produce the desirable impact said the Reserve Bank of India Governor Sanjay Malhotra during the deliberations for the October bi-monthly monetary policy revealed the minutes of the meeting on Wednesday. “Even though there is policy space to further cut the rate, I feel this is not the opportune time as it may not yield the desirable impact. Therefore, I vote to keep the repo rate unchanged at 5.50 per cent. The intent of policy is nevertheless to continue facilitating growth-enabling conditions.” The Monetary Policy Committee of the Reserve Bank on October 1 left the repo rate unchanged for the second time at 5.50 per cent on October 6 choosing to buy time and let the earlier 100 bps of easing fully percolate through the financial system even as the growth picture brightened. The RBI lifted its FY26 growth projection to 6.8 per cent from 6.5 per cent earlier. On inflation the MPC was noticeably more sanguine, trimming its FY26 CPI forecast to 2.6 per cent from 3.1 per cent. “The prevailing global uncertainties and tariff-related developments are likely to decelerate growth in H2:2025-26 and beyond. While policy space exists to support growth, it is prudent to wait for the impact of front-loaded monetary and recent fiscal measures before deciding the next step,” Malhotra said. Even though growth is strong by current reckoning, its outlook is softer and is expected to be below our aspirations. The benign outlook for headline and core inflation as a result of the downward revision of projections opens up policy space to further support growth. “Moreover, I prefer to retain the neutral stance as any change to an accommodative stance at this stage, as suggested by some members, would tantamount to giving a definitive forward guidance about the future trajectory of the policy rate. The policy uncertainty, rapidly evolving developments and the foggy outlook suggest that we exercise caution and take a view for each policy as per the then prevailing macroeconomic conditions and outlook,” concluded the Governor.