RBI Minutes: Governor Sanjay Malhotra Backs Rate Hold, Seeks More Clarity On Inflation Trajectory

Mumbai, August 19, 2026: RBI Governor Sanjay Malhotra preferred to wait for greater certainty on the inflation trajectory, as he and other members of the MPC voted to maintain the existing interest rate earlier this month, according to minutes of the meeting of the rate-setting panel released on Wednesday.

The Governor-headed six-member Monetary Policy Committee (MPC) decided to keep the benchmark policy rate (repo) unchanged for a fourth consecutive time, opting to wait for greater clarity on whether higher energy costs triggered by the US-Iran conflict feed into broader inflationary pressures.

Economy Performs Better Than Expected

Despite the conflict in West Asia disrupting supply chains, heightened uncertainty, and an erratic monsoon so far, the Indian economy has performed better than expected in Q1:2026-27, the Governor said as per the minutes.

Monetary response to a supply-side shock is warranted when there are signs of it leading to a generalisation of inflation, de-anchoring of inflation expectations or persistent inflation. While risks remain, evidence of this so far is limited, Malhotra said.

"...I would prefer to wait for more certainty to emerge on the inflation trajectory in terms of the persistence of realised prints at these or higher levels, the forecast and the likely levels to which inflation may normalise and settle, for any recalibration of the policy rate," he said.

Risks To Inflation Remain

The Governor also stressed the need to be watchful as the risks of higher food, fuel and other input prices translating into a broad-based increase in inflation and de-anchoring of expectations persist.

"Any evidence of these risks materialising may need policy tightening," he opined.

Gupta Favours Wait And Watch

Deputy Governor and MPC member Poonam Gupta was of the view that with persistent uncertainty on account of global developments and weather-related risks, the best course of action would be to wait and watch a bit more.

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"This would allow for the weather-related uncertainties to fully settle; to ascertain how far the supply-side inflation is getting entrenched; and to get some more clarity on the global front," she said.

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