RBI flags inflation risks, seeks clearer rate roadmap

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Key points

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• RBI GovernorMonetary Policy Committeeinflation claritypolicy rate recalibrationSanjay Malhotrarepo rateMonetary Policyglobal uncertaintyfood fuel rates.
• RBI Governor Sanjay Malhotra flags inflation risks; notes rate recalibration needs greater clarity, MPC Minutes show.

As the central bank remains alert to risks from food, fuel and input costs, RBI Governor Sanjay Malhotra remarked greater clarity on the inflation trajectory is needed before any recalibration of the policy rate. The MPC retained the repo rate, with members favouring a wait-and-watch approach against the backdrop of persistent uncertainties.

While warning that a broad-based rise in food, fuel and input costs could warrant monetary tightening, reserve Bank of India Governor Sanjay Malhotra remarked he would prefer greater clarity on the persistence and trajectory of inflation before considering any recalibration of the policy rate. Malhotra created the remarks as the six-member Monetary Policy Committee (MPC) voted earlier this month to keep the benchmark repo rate unchanged for a fourth consecutive gathering, according to the minutes of the August session issued on Wednesday. RBI MPC session August 2026: Repo rate decision, inflation outlook & GDP forecast; key takeaways from Governor Malhotra's speech.

".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 remarked. The Governor remarked monetary policy would need to respond to a supply-side shock if it began to result in a generalisation of inflation, de-anchoring of inflation expectations or persistent inflation. While such risks remained, evidence of them materialising was limited so far, he remarked. Live Events.

Malhotra, nevertheless, stressed that the inflation outlook warranted close monitoring, particularly against the backdrop of risks that higher food, fuel and other input costs could spill over into broader cost pressures. "Any evidence of these risks materialising may need policy tightening, " he opined. Inflation risks remain in focus.

In practice, the MPC's decision to hold rates came against the backdrop of heightened global uncertainty, disruptions to supply chains stemming from the conflict in West Asia and an erratic monsoon. Despite these headwinds, Malhotra remarked the Indian economy had performed better than anticipated in the first quarter of 2026-27. The Governor's comments indicate that the central bank is seeking further evidence on the durability of inflation trends before making any change to the policy stance, with both realised inflation readings and the outlook for cost pressures remaining notable considerations. Deputy Governor and MPC member Poonam Gupta additionally backed a wait-and-watch approach, citing continuing uncertainty from global developments and weather-related risks.: RBI's rate, GDP and inflation verdicts additionally come with some stark warnings "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 noted. Gupta remarked waiting for more information would assist the MPC assess whether supply-side inflationary pressures were becoming entrenched and provide greater clarity on the external environment. The MPC's latest decision thus reflected a preference to monitor incoming inflation and expansion data before recalibrating the policy rate, with the Governor flagging the possibility of tightening if emerging rate risks commence to broaden or affect inflation expectations. Add Now!

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