Minutes of the Monetary Policy Committee Meeting, August 3 to 5, 2026

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( 486 kb ) Date : Aug 19, 2026 Minutes of the Monetary Policy Committee Meeting, August 3 to 5, 2026

[Under Section 45ZL of the Reserve Bank of India Act, 1934] The sixty second meeting of the Monetary Policy Committee (MPC), constituted under Section 45ZB of the Reserve Bank of India Act, 1934, was held during August 3 to 5, 2026. 2. The meeting was chaired by Shri Sanjay Malhotra, Governor and was attended by all the members – Dr. Nagesh Kumar, Director and Chief Executive, Institute for Studies in Industrial Development, New Delhi; Shri Saugata Bhattacharya, Economist, Mumbai; Professor Ram Singh, Director, Delhi School of Economics, Delhi; Dr. Poonam Gupta, Deputy Governor in charge of monetary policy and Shri Indranil Bhattacharyya, Executive Director (the officer of the Reserve Bank nominated by the Central Board under Section 45ZB(2)(c) of the Reserve Bank of India Act, 1934).

3. According to Section 45ZL of the Reserve Bank of India Act, 1934, the Reserve Bank shall publish, on the fourteenth day after every meeting of the Monetary Policy Committee, the minutes of the proceedings of the meeting which shall include the following, namely:

the resolution adopted at the meeting of the Monetary Policy Committee;

the vote of each member of the Monetary Policy Committee, ascribed to such member, on the resolution adopted in the said meeting; and

the statement of each member of the Monetary Policy Committee under sub-section (11) of section 45ZI on the resolution adopted in the said meeting.

4. In the light of evolving developments on the global and domestic front, the MPC reviewed in detail the staff’s macroeconomic projections that included inputs from survey results and stakeholder consultations. The MPC also reviewed alternative scenarios around various risks to the outlook. Drawing on the above and after extensive discussions on the stance of monetary policy, the MPC adopted the resolution that is set out below.

Resolution

5. The Monetary Policy Committee (MPC) held its 62nd meeting from August 3 to 5, 2026, under the chairmanship of Shri Sanjay Malhotra, Governor, Reserve Bank of India. The MPC members Dr. Nagesh Kumar, Shri Saugata Bhattacharya, Prof. Ram Singh, Dr. Poonam Gupta and Shri Indranil Bhattacharyya attended the meeting.

6. After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC voted unanimously to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.25 per cent. Consequently, the standing deposit facility (SDF) rate remains at 5.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate remain at 5.50 per cent. The MPC also decided to continue with the neutral stance.

Growth and Inflation Outlook

Global Outlook

7. The global economic outlook in 2026 so far has been characterised by sharp and frequent market swings, persisting inflation concerns and shifting policy expectations. Relief from the temporary ceasefire in West Asia has quickly dissipated amidst resumption of conflict in July. Persistent inflation has prompted several central banks to raise rates while others remain vigilant. The US dollar appreciated, supported by elevated yields, a hawkish Federal Reserve tone, and a relatively buoyant US economy riding on AI driven productivity gains. The global equity market remained volatile as investors repriced their exposure to AI-related stocks. Conflict in West Asia, volatile oil prices, sticky inflation expectations, and fragile public finances in systemic economies pose significant downside risks to the outlook.

Domestic Outlook

8. The Indian economy has remained resilient amidst persisting global headwinds. High frequency indicators available so far point towards steady domestic demand in Q1:2026-27. Private consumption remained robust. Investment continues to be resilient, as suggested by various indicators related to construction, capital goods and bank credit. External demand also sustained, as healthy expansion in services exports was complemented by a rebound in merchandise exports.

9. Looking ahead, the turbulent global economic environment is likely to have some bearing on domestic economic activity. Energy prices and supply chain pressures remain elevated and uncertain. The adverse impact is being contained with various supply side measures. Even though the situation is still evolving, deficient and uneven south-west monsoon amidst El Niño conditions poses some risks to agriculture sector’s outlook and rural demand. Nevertheless, government’s initiatives pertaining to crop diversification including short duration as well as climate-resilient crops, and water harvesting and conservation, among others, are expected to mitigate the impact. Furthermore, sustained momentum in services, continuing impact of GST rationalisation, and broadly stable employment conditions should continue to support urban demand. Strong capacity utilisation, robust credit flow and the government’s continued thrust on infrastructure are expected to sustain investment activity. While services exports are expected to sustain, merchandise exports will be supported by the recent trade agreements and thrust on diversification.

10. Taking all these factors into consideration, real GDP growth for 2026-27 is projected at 6.7 per cent, with Q1 at 7.0 per cent; Q2 at 6.4 per cent; Q3 at 6.5 per cent; and Q4 at 6.8 per cent. Real GDP growth for Q1:2027-28 is projected at 7.3 per cent ( Chart 1 ). The risks are evenly balanced.

11. While CPI inflation increased to 4.4 per cent in June 2026 after remaining below the target for 16 consecutive months, it turned out to be lower by 30 basis points (bps) than what was earlier projected for Q1:2026-27. The increase in June was primarily due to higher food and fuel inflation. The increase in food inflation was broad-based with most constituents witnessing price pressures during May-June. Fuel inflation also rose, driven by revision in retail prices, following the sharp spike in international energy prices. It also led to higher inflation in select categories such as restaurant charges. Despite the pressure from higher input costs, core (CPI excluding food and fuel) inflation remained unchanged at 3.9 per cent during May-June. Excluding precious metals, core inflation remained even lower at 2.3-2.5 per cent during this period.

12. Going forward, El Niño’s impact on temporal and spatial rainfall distribution continues to remain a risk, although proactive supply management and adequate stocks of foodgrains could provide buffers. Global oil prices have remained volatile with sharp two-way movements triggered by geopolitical developments, blurring the near-term outlook. Although generalised inflation pressures continue to remain modest so far, the risks of higher food, fuel and other input prices translating into a broad-based increase in inflation persist.

13. Considering all these factors, CPI inflation for 2026-27 is projected to be 5.0 per cent with Q2 at 4.7 per cent; Q3 at 5.9 per cent; and Q4 at 5.5 per cent. Inflation for Q1:2027-28 is projected at 5.3 per cent with risks being evenly balanced ( Chart 2 ). Core inflation is projected at 4.3 per cent for 2026-27. Core inflation, excluding precious metals, is expected to be lower in the near term, suggesting that demand pressures remain contained.

Rationale for Monetary Policy Decisions

14. Headline CPI inflation edged up above the target, as expected. The realised inflation for Q1, however, remained marginally lower than projections reflecting limited pass-through of cost pressures. The higher inflation is mostly on account of fuel and food with little signs of generalisation of price pressures so far. Core inflation excluding precious metals continues to be benign. As projected earlier, headline inflation is expected to rise further in the near term and peak in Q3:2026-27, primarily due to food and fuel, before moderating thereafter. The underlying inflation, reflected by core inflation excluding precious metals, which has been benign for some time, is likely to align with core inflation towards the end of the financial year.

15. Growth continues to be supported by resilient domestic demand, sustained expansion in manufacturing and services activity, and robust exports, reaffirming India’s position as the world's fastest-growing major economy.

16. To sum up, even though headline inflation is projected to increase, it is primarily on account of supply side pressures caused by food and fuel; it is not getting broad-based; core inflation remains moderate and is expected to decline after peaking in Q3. Growth, albeit resilient, is expected to be lower in 2026-27. The outlook, however, is hazy because of the uncertainties regarding south-west monsoon, El Niño, geopolitics and global trade policy. There is a need for greater clarity to emerge, especially regarding inflation, its path and composition before taking any policy action. Any such action would also have to consider the need for recalibration of policy rates in line with the evolving growth-inflation dynamics, especially the normalisation of the underlying inflation from its benign levels seen hitherto.

17. Considering all these factors, the MPC voted to keep the policy rate unchanged. The MPC also decided to retain the neutral stance to respond appropriately to macroeconomic developments. The MPC underscored that it will maintain a close vigil and remain resolute in its commitment to align inflation with the target.

18. The minutes of the MPC’s meeting will be published on August 19, 2026.

19. The next meeting of the MPC is scheduled for October 5 to 7, 2026.

Voting on the Resolution to keep policy repo rate unchanged at 5.25 per cent

Member

Vote

Dr. Nagesh Kumar

Yes

Shri Saugata Bhattacharya

Yes

Prof. Ram Singh

Yes

Shri Indranil Bhattacharyya

Yes

Dr. Poonam Gupta

Yes

Shri Sanjay Malhotra

Yes

Statement by Dr. Nagesh Kumar

20. The Indian economy has displayed remarkable resilience in the face of challenging headwinds stemming from the ongoing conflict in West Asia, especially the volatility in crude oil prices, trade policy uncertainties, and agricultural risks arising from El Niño affecting the monsoons. This is borne out by the early indicators available for the current year.

21. While the agriculture GVA is expected to moderate somewhat due to projected monsoon deficiencies, stronger rates of capacity utilisation, robust credit growth to industry, healthy private consumption, and front-loading of the government capex, among other trends and indicators, suggest a pick-up in investment activity in Q1:2026-27. Services and manufactured exports grew robustly. Overall, the RBI growth projections for 2026-27 have been revised by 10 basis points to 6.7% from 6.6% made at the June MPC.

22. On the inflation front, although the actual headline inflation in June 2026 was 4.4%, the core inflation at 3.9% indicated the supply-side nature of inflation with no evidence of overheating. The RBI’s CPI projection for the full year 2026-27 has been revised downwards by 10 basis points to 5.0% compared to 5.1% made at the June policy.

23. The slight improvement in the growth and inflation outlook of the Indian economy should not be a cause for any complacency, however. Firstly, the agriculture outlook continues to remain clouded by the El Niño, although the monsoon deficit has been mitigated in July in several parts of the country. The government is also promoting crop diversification towards short-duration as well as climate-resistant crops to mitigate the potential monsoon deficiencies.

24. The concerns arising from the West Asia conflict and the blockade of the Strait of Hormuz have not receded, even as India has made efforts to deal with the situation by diversifying the sources of supply. Trade policy uncertainties have been aggravated. The US imposed a 10% tariff on top of MFN tariffs on Indian exports on account of the use of forced labour, which may appear to be slightly lower than the 12.5% imposed on some peers. Another S.301 investigation is currently ongoing against India, among other countries, for excess capacity. A 100% tariff has been imposed on generic drug imports from 2028, and 200% from 2029. Given that the US is the biggest market, accounting for one-fifth of India’s exports and around a third of labour-intensive exports such as textiles and garments, these are matters of great concern. India needs to diversify the export markets urgently. In that context, a positive development is the recent conclusion of India’s FTAs with the European countries: the FTA with the EFTA countries and the UK are already in force, and the one with the EU signed on 27 January 2026 is likely to come into force at the end of 2026. Together they provide India’s exports, especially in labour-intensive sectors, with a level playing field vis-à-vis Vietnam and Bangladesh in European countries for the first time and may help to diversify our exports.

25. Therefore, we need to be extremely cautious in such a highly uncertain economic environment and be watchful of the emerging geopolitical, trade policy and monsoon-related trends and their effect on India’s economic outlook. At the current juncture, there does not seem to be a case for a monetary policy action. Hence, I vote for the status quo on the repo rate. I also feel that a neutral stance is appropriate for such uncertain circumstances.

Statement by Shri Saugata Bhattacharya

26. The balance and nature of risks have kept evolving since the start of the West Asia conflict in late February ’26; other sources of uncertainty have layered on this. The global economic outlook in 2026 so far has been characterised by sharp and frequent market swings, persisting inflation concerns and shifting policy expectations.

27. Since the MPC review in June ’26, expectations of a ceasefire following a 60-day Memorandum have been belied. Actions of central banks – both developed and emerging markets – have diverged, but have been largely characterised by a cautious, “wait and watch” approach.

28. India’s inflation and growth dynamics, too, continue to remain clouded, although presumptively slightly better than the projections at the June ’26 review.

Real GDP growth for 2026-27 is projected at 6.7 per cent and the CPI inflation is projected to be 5.0 per cent. The growth forecasts appear to be supported by robust high frequency indicators. On inflation I would exercise a word of caution. The persistence of high fuel prices is likely to feed into second round inflation, resulting from pass throughs of higher input costs to consumer prices. Inflation risks might then become tilted to the upside. In addition, household inflation expectations remain elevated, which can potentially contribute to tertiary pressures.

Financial conditions continue to remain tight, although having eased since the announcement of the additional measures to attract foreign deposits and capital in the June ’26 statement. Sector-wise credit growth from banks and NBFCs to industry, infrastructure and services has remained strong across most sectors, and across MSMEs, mid- and large corporates. The overall flow of resources to the corporate sector also remains resilient.

On the external front, global uncertainty, emanating not just from geopolitics, but also the continuing flux surrounding US tariffs and other proposed punitive measures, continue to cast a shadow on both the current and capital accounts. However, India’s current account deficit for the months of April and May remain at sustainable levels.

29. A composite assessment of the above factors requires balancing the costs of policy action where the economic costs of early policy tightening should be weighed against the risk of inflation getting persistent, thereby requiring even more aggressive tightening to guide inflation towards the target. Yet, there is scant empirical evidence – based on multiple global and domestic macro-financial comparisons extending over the past couple of decades – to guide present decisions. Hence, I judge it appropriate to await evidence of a further pickup in aggregate demand and generalisation of price pressures before taking the next policy action. Another factor which needs to be tracked are the levels of real interest rates.

30. Despite this caution, the forecast normalisation of underlying inflation from earlier benign levels will require close monitoring of the growth-inflation dynamics, for the appropriate time to recalibrate the policy rate.

31. Based on this reasoning, I vote to keep the repo rate unchanged at this meeting. Given the fluidity of the macro-financial environment, it is also appropriate to retain the neutral stance.

Statement by Prof. Ram Singh

32. Since the last MPC meeting, economic headwinds have changed very little. The global economy continues to present a complex mix of persistent inflationary pressures, volatile financial markets, and signals of monetary tightening from markets and central banks in advanced economies. The West Asia (WA) conflict has continued to put upward pressure on crude oil and its byproducts. 1 With the US Federal Reserve facing sticky services inflation and a mixed-signal labour market, rate-cut expectations are more uncertain. Domestic economy dynamics warrant close attention on both the inflation and growth fronts.

33. As of June 2026, fuel inflation has remained modest because the sharp spike in international energy prices has had limited pass-through to domestic retail prices. CPI inflation has crossed the 4% target by small margin. However, core inflation was still below 4%. Core inflation excluding precious metals remained much lower at 2.5 per cent. These numbers suggest limited pass-through so far of the terms-of-trade shocks (due to a sharp escalation in crude prices and a weakened INR) the economy experienced over the last two quarters.

34. Going forward, the June 05th joint package of reforms by the RBI and the Ministry of Finance has received enthusiastic responses. In response to these incentives, as of July 31, 2026, a total of $36.725 billion has already been received under the FCNR(B) swap facility. Additionally, the bond market has witnessed healthy Foreign Portfolio Investment inflows through FAR. These forex inflows will support INR stability and help limit the impact of imported inflation.

35. At the same time, the RBI’s enterprises survey indicates that input cost pressures have built up and are starting to work their way through headline CPI prints. The pass-through of higher global energy prices is already visible in several inputs such as commercial LPG, industrial raw materials, chemicals, rubber, and plastic products. The full impact will be visible only in the coming months.

36. While the projected numbers are within the FIT range, upward deviations from the 4% target are expected to be significant and may persist for several quarters. At this point, CPI inflation for 2026-27 is projected to be 5.0 per cent, peaking in Q3 at 5.9 per cent, then moderating to 5.5 per cent in Q4. The inflation trajectory calls for close watch. Incoming data will be crucial to our understanding of the extent and degree of the second-round impact on CPI inflation.

37. On the growth front, the economy has shown remarkable resilience. Recent data on a wide range of indicators, such as FMCG sales, passenger vehicle and tractor sales, credit growth to the household sector, and credit card spending, indicate the resilience of domestic demand so far.

38. Private sector capex numbers for FY 27 Q1 are also encouraging across several sectors, including real estate and energy. On the exports front, services exports are holding up well. Goods exports have continued to grow strongly in April-June 2026. Bank credit growth rate reinforces the resilient growth prospects. Overall, the economy is expected to register real GDP growth of 6.7% in FY27.

39. At the current juncture, inflation-growth dynamics raise some issues. One macro variable warranting attention is the real interest rate, which has implications for savings and investment decisions. At the same time, going by the core inflation (with and without precious metals) numbers, there are no signs yet of overheating in the economy – the headline CPI, at least as of now, remains a supply-side phenomenon. The third issue is that the growth rate of the economy at about 7% without any noticeable signs of demand-driven heating (as indicated by the core inflation data that has been consistently below 4% for quarter after quarter until now), suggests that the potential growth rate consistent with a neutral interest rate is well above 7%. Understanding all these issues is important from a monetary policy perspective. The incoming data will be crucial.

40. All things considered, monetary policy must ensure that inflation expectations remain anchored. However, high uncertainty still looms over several key monetary policy indicators. While the economy has withstood the conflict spillovers with limited impact so far, the strains are increasingly becoming visible. We have to closely watch if and how inflation-related risks resolve — El Niño’s effects on food inflation and global oil prices. As of now, it makes sense to retain all the maximum operational flexibility needed to respond to an evolving inflation trajectory. If external shocks worsen or the second-round price effects spread widely, we should be able to swiftly adjust policy to protect macroeconomic stability.

41. Accordingly, in this meeting also, I vote to keep the policy repo rate unchanged at 5.25% and support maintaining the stance to "neutral.

Statement by Shri Indranil Bhattacharyya

42. The Indian economy has weathered the storm generated by turbulent global geo-political environment, trade-related uncertainties, and an unpredictable monsoon in Q1:2026-27. High-frequency indicators and early corporate results suggest sustained momentum in industrial and services sector activity in Q1, while investment retained its momentum, driven by capital goods production, sustained credit growth, and the government’s continued emphasis on capital expenditure. On the external front, robust exports in goods and services cushioned high imports in Q1. Urban consumption held up, supported by a buoyant services sector and stable employment but below-normal rainfall risks damaging agricultural output and dampening rural consumption. Although crude oil prices have recently eased, it remains highly vulnerable to any sudden escalation of the conflict. Based on these factors, real GDP growth projection for 2026-27 was increased by 10 bps from the June policy.

43. After remaining benign and well within the target for 16 months, headline inflation firmed up to 4.4 per cent in June. Although the inflation forecast for 2026-27 has been trimmed by 10 bps, it is on a clear upward trajectory averaging 5.6 per cent over the next 9 months (Q3:2026-27 to Q1:2027-28), with supply-side shocks threatening to trigger second-round impact across the broader economy. Price spikes are concentrated in volatile food and fuel categories; as a result, higher input costs are already spilling over onto services prices, viz., restaurants. As such, core inflation for the year is projected at 4.3 per cent while core inflation, excluding precious metals, is likely to gradually align with core by Q4. Looking ahead, inconsistent monsoon and evolving El Niño conditions pose a direct threat to rainfall distribution and agricultural yields. Moreover, intermittent geopolitical shocks are fuelling sharp but volatile two-way movements in global oil prices blurring the near-term outlook. The confluence of both these factors can precipitate sustained food and fuel shocks that can deeply get entrenched resulting in generalisation of inflation.

44. Notwithstanding the above, I vote for maintaining status quo on the policy rate and retaining the neutral stance because of the following considerations. First, the inflation forecast acts as the conditional intermediate target in an inflation targeting framework. 2 Therefore, the assumptions underlying the forecasts such as oil prices become critical, particularly when they are highly volatile and hostage to geopolitical developments. Although the risks on monsoon remain elevated, food price increases have been moderate so far. In the coming months, greater clarity on monsoon and food and fuel inflation trajectory is likely. Therefore, I prefer to wait for the risks to manifest in inflation prints, given the importance of evidence-based policy in a highly uncertain environment.

45. Second, there has been limited pass-through so far of spikes in food and fuel inflation, suggesting that inflation is yet to get broad based. The weighted distribution of the components of year-on-year headline inflation, as measured using the CPI diffusion index 3 for June-2026, shows that most of the weighted items (69 per cent) are still displaying less than or equal to 4 per cent inflation. However, the shift in the distribution towards higher inflation numbers warrants a careful vigil. One must look out for the extent of generalisation and risk of inflation expectations getting unanchored before contemplating any rate hike.

46. In a highly uncertain environment, economic agents are better served by framework guidance than by any explicit forward guidance about the future path of policy. Framework guidance is defined as explicit communication about the central bank’s objectives, diagnosis, and reaction function. Framework guidance explains how policy distinguishes demand from supply pressures, temporary price changes from persistent inflation, and direct price effects from a broader spread into wages and expectations. The reaction function – which depicts how changes in inflation persistence, pass-through, and expectations affect the timing and calibration of policy – is the more reliable guide for comprehending policy intent. 4 The emphasis consequently shifts from one baseline rate path to how policy would respond under different economic conditions. 5 On this count, a pause preserves flexibility on timing; it does not necessarily imply an extended pause.

Statement by Dr. Poonam Gupta

47. After abating a bit in June 2026, global uncertainties flared again in July. Nevertheless, the outlook on the prices and availability of oil and other energy products has improved. Domestically, the quantum and distribution of rainfall have improved in recent weeks. As the large deficiency recorded in June narrowed through July, sowing has gained pace, and reservoir levels have risen. In addition, a range of high-frequency indicators continue to display resilience and dynamism, supporting the growth momentum.

48. Taken together, these developments suggest that the growth outcome during the year may turn out to be somewhat better than projected in the June policy, while inflation could be marginally lower. Accordingly, real GDP growth for 2026-27 is now projected at 6.7 per cent; while CPI inflation is projected at 5.0 per cent, marking a 10 bps upward revision in growth and 10 bps downward revision in inflation. Risks to both are perceived to be evenly balanced.

49. These updated projections rest on the revised assumptions for oil prices. While the GDP and inflation forecasts of April policy assumed oil prices to average US$85 per barrel, and the June policy assumed it to be US$95 per barrel, the current situation warrants a modest revision in the average oil price for the year. Based on current assessment of oil price futures, it would be reasonable to expect oil prices to average about US$90 per barrel during the year, close to the level assumed in the IMF’s WEO update of July 2026.

50. Taking into account the aforementioned factors, the scope for any further easing does not seem to exist at the current juncture. Instead, given that the headline inflation is projected to peak to a level as high as 5.9 per cent in Q3 2026-27, a case for a hike may emerge during the course of the year.

51. I believe 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. 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.

52. Hence, I vote for the status quo, that is, to keep the policy repo rate unchanged at 5.25 per cent. I also propose to retain the stance at neutral, signalling that the future course of policy action should be data dependent.

Statement by Shri Sanjay Malhotra

53. 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. It is expected to remain resilient going ahead. A growth of 6.7 per cent, as projected for this financial year is robust, given the headwinds. Inflation is inching up. It is expected to peak in Q3 before moderating and is projected to average five per cent this financial year. The growth-inflation dynamics is more or less similar to that in the last policy meeting.

54. 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. As argued in the June meeting, the elevated headline inflation is primarily due to supply side shocks; it is mostly driven by higher food and fuel prices; and there are limited signs of generalisation of inflation with core inflation remaining modest. Inflation expectations, too, while slightly higher, are contained. Moreover, inflation is expected to taper from its peak in Q3. This shock does not therefore call for a monetary response to curtail demand as of now.

55. Having said this, there are signs of a normalisation of inflation from its benign levels seen hitherto. The average inflation last year, when the policy rate, was brought down to 5.25 per cent, was only two per cent. Not only has headline inflation already averaged 3.93 per cent this year, even core excluding precious metals is expected to converge to core inflation in the last quarter of this financial year, with core inflation projected to average 4.3 per cent in 2026-27. This may suggest a recalibration of policy rate.

56. However, 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. We also 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.

57. In view of these considerations, I vote to keep the policy rate unchanged while retaining the neutral stance.

(Brij Raj)

Chief General Manager

Press Release: 2026-2027/925

1 Brent crude prices, which averaged around US$67 per barrel during Jan-Feb 2026, have come under sharp upward pressure, settling in the $80- $90 per barrel range after spiking well above $100.

2 Svensson, L. E. O. (1997), “Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets.” European Economic Review 41 (6): 1111–46.

3 An inflation diffusion index measures how widely price increases are spreading across different goods and services in an economy. Instead of tracking the average size of a price change, it calculates the percentage of items or sectors showing rising prices. This helps in assessing whether inflation is driven by a few items or widespread across the commodity basket that is used as the inflation metric (see Database on Indian Economy, Reserve Bank of India).

4 Cœuré, B. (2018), “Forward Guidance and Policy Normalisation,” speech at the Deutsches Institut für Wirtschaftsforschung, Berlin, 17 September.

5 Bell, S., Chavaz, M., Hofmann, B., Rees, D. and Rottner, M. (2026), “Evolving Approaches to Monetary Policy Communication in the Face of Uncertainty: Fan Charts, Scenarios and Guidance,” BIS Quarterly Review, March.

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