The Reserve Bank of India (RBI) Governor Sanjay Malhotra at the Monetary Policy Committee (MPC) meet said that Indian economy presents a picture of strength, stability, and opportunity. The RBI held MPC meet from August 4 to 6 while stressing that the monetary policy needs to remain watchful as uncertainties of US tariffs are still evolving. Now, the RBI released the minutes of the MPC Meeting held. Malhotra and five other members of the MPC voted for keeping the short-term lending rate at 5.5 per cent.

As per the minutes, the Governor said ‘Overall, our economy presents a picture of strength, stability, and opportunity. India’s strong fundamentals, growth-inducing policies, and forward-looking economic strategy clearly place it in a strong position’. He said while growth has remained steady, inflation outcomes have been far more benign on account of higher food price moderation. He added ‘Although we are likely to see inflation undershooting the target in the near term, with a likelihood of monthly numbers even crossing the lower tolerance band of 2 per cent, headline inflation is projected to inch up from Q3 onwards. The uncertainties of tariffs are still evolving’. Given the current state of uncertainty on the external front, he opined monetary policy needs to remain watchful. He also said the CRR cut, which is likely to kick in from next month, will facilitate further monetary transmission and stimulate economic activity. 

According to the minutes, Executive Director Rajiv Ranjan said overall, growth remains resilient, supported by public capex, rural demand, and steady services activity, although industry shows some unevenness. External member Ram Singh said that to respond to an unpredictable set of events, it is crucial to maintain policy options, in terms of the number of policy tools that can be used as well as their force. MPC member Nagesh Kumar said while the case for stimulating private investments and urban demand remains, and the benign inflation outlook provides policy space, ‘we may wish to wait and watch’ as the transmission of the existing actions takes place and how the trade policy uncertainties play out before considering policy actions at the October meeting of the MPC.