Key facts
- Further rate hikes may be needed to curb inflation.
- Panel members are split over the extent of tightening.
- Retail inflation accelerated to 5.54% in September.
- Central bank expects inflation to average 6% in the October-December quarter.
Members of India's rate-setting panel indicated that further rate hikes may be needed to curb inflation but stopped short of endorsing an aggressive tightening cycle due to risks to economic growth, according to minutes released on Wednesday. The Reserve Bank of India's 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. The committee also shifted its stance to 'calibrated tightening' from 'neutral'. Governor Sanjay Malhotra stated that the shift signaled rate cuts were off the table. Deputy Governor Poonam Gupta suggested a further increase in the policy rate might be needed to keep inflation low and anchored. MPC member Saugata Bhattacharya noted a strong economic case for tightening but warned against rapid adjustments that could constrict growth. However, some members, like Nagesh Kumar and Ram Singh, opposed changing the monetary policy stance, with Singh suggesting incremental, mild repo rate hikes.