RBI MPC minutes presented the rationale behind the decision of a unanimous call to shift the policy stance to neutral and the decision on repo rate cut of 50 bps with a 5-1 MPC vote.
Download ReportQuantEco Research || MPC Minutes - Booster dose for growth with front loaded actions
The RBI published the Monetary Policy Committee minutes of the scheduled meeting held on Jun 6th, which saw a booster dose of policy easing with a 50 bps cut in the repo rate (to 5.50%) along with the announcement of a 100 bps reduction in the CRR (to 3.00%). This was accompanied by a shift in the monetary policy stance to ‘neutral’ from ‘accommodative’ earlier. While the decision on the shift in policy stance was completely unanimous, the one on a 50 bps cut in repo rate saw a 5-1 MPC vote.
The MPC members were united in their assessment with respect to the stronger than anticipated disinflationary momentum, which as projected by the RBI would result in CPI inflation undershooting the 4% target in FY26. The comfort on inflation was perceived to be broad based, with a benign outlook on the key drivers of food, fuel, and core items within the CPI. This allowed room to the MPC to reduce repo rate, with 5 out of 6 members opting for a 50 bps cut in a front-loaded manner to minimize the lag in monetary policy transmission, with the objective of reviving credit and overall growth momentum.
Having front loaded policy support in a decisive manner, we expect the MPC to be on pause in the remaining months of FY26 amidst prevailing geopolitical and geoeconomic risks.