Reserve Bank of India (RBI) announced minutes of its latest Monetary Policy Committee Meeting yesterday. Committee member Nagesh Kumar noted that the economic outlook for the Indian economy has brightened considerably since the December 2025 MPC Meeting. The inflation outlook continues to remain benign, with headline CPI remaining low at 1.3% in December 2025, and the inflation outlook not showing any concerns of overheating. This leads to a possible changed narrative for monetary policy discussion.

Saugata Bhattacharya stated that high frequency indicators signal resilience in economic activity. Bank credit growth to non-retail sectors has gradually increased, which, together with a stable manufacturing capacity utilisation and signs of fiscal stimulus-led consumption demand boost, might be a harbinger of a gradual revival in private sector capex. Assessing the macro-financial environment, while awaiting the new economic data series, the policy rate is appropriate.

Prof. Ram Singh noted that despite the 7 per cent plus growth rate, there are no signs of overheating in the economy. CPI inflation for 2025-26 is expected to be 2.1 per cent, with Q4 at 3.2 per cent. CPI inflation for Q1and Q2 of FY27 is projected to be a tad higher at 4.0 per cent and 4.2 per cent, respectively. Filtering out the effect of increases in prices of precious metals (60-70 bps), the underlying inflation pressures are expected to remain muted. Going ahead, robust domestic demand in conjunction with improved capacity utilisation is likely to attract fresh private-sector investment.

Indranil Bhattacharyya stated that developments on the inflation front have been largely on expected lines barring the significant increase in prices of precious metals, viz., gold and silver. CPI headline inflation has inched up from its historical low levels although it remains below the lower tolerance threshold. While assessing headline inflation, its underlying trends as well as its likely trajectory going forward, the key elements of its major constituents would have to be delineated. While food has generally recorded deflation in six of the last seven prints, core inflation rose to 4.6 per cent in December, driven by prices in precious metals. The flexible inflation targeting (FIT) framework supports maintaining the current stance as long as inflation expectations remain well-anchored.

Poonam Gupta noted that the global environment remains uncertain, with economies, financial markets, and commodity markets facing varied levels of volatility and risks. Yet, from the Indian perspective, the announcement of a trade deal with the US and the signing of a major free trade agreement (FTA) with the EU have resulted in a more favorable external sector outlook. Underpinned by the continued buoyancy of high frequency indicators, and model-based projections, preliminary estimates of growth for 2026-27 by various agencies have been revised upwards. Low inflation continues to be a boon.

RBI Governor Sanjay Malhotra stated that India’s economic activity, driven primarily by domestic factors, remained resilient with real GDP growth in 2025-26 projected to be higher by 90 bps from 6.5 per cent in 2024-25. The outlook for the ensuing year is also expected to be strong. Domestic drivers of growth continue to be robust. Several growth-supportive measures announced in the Union Budget should further boost growth. Inflation in November and December 2025 continued to remain low and below the lower tolerance threshold. In terms of the overall trajectory, inflation, as projected earlier too, is expected to remain benign.