The minutes of the Monetary Policy Committee (MPC) meeting held on April 7-9 reflect a clear dovish tone, with growth now taking centre stage in the RBI policy approach.
According to a report by Union Bank of India, the MPC appears more confident about inflation gradually moving towards the 4% target, which has allowed it to shift focus toward supporting economic growth.
It said “The minutes, in line with the policy statement, are clearly dovish, with growth gaining a clear policy priority as greater confidence has emerged with respect to inflation trending towards the 4% target”.
The report said the RBI’s decision to change the monetary policy stance to “accommodative” was a significant move, especially since it came along with a widely expected 25 basis points (bps) rate cut.
What Else For RBI MPC?
This combination, according to the report, acted as a “double booster shot” for the economy. The accommodative stance implies that interest rates will likely remain low or may even go down further, which supports economic activity by making borrowing cheaper.
Interestingly, all MPC members agreed on the rate cut and shift in stance, except one — Saugata Bhattacharya — who showed some hesitation about changing the stance. He preferred keeping policy flexible. However, most members made it clear that the accommodative stance simply signals that a rate hike is unlikely for now, and that the RBI could still pause if economic conditions demand it.
The report also noted that the downward revision in the RBI’s inflation forecast for FY26 by 20 bps, bringing it closer to the 4% target, has created additional room for monetary easing in the future. While the RBI has projected India’s GDP growth at 6.5% for FY26, Union Bank feels this is a bit too optimistic.
The report pegs growth closer to 6%, citing weak capital expenditure sentiment and rising global uncertainties, including trade volatility and unstable capital flows. Looking ahead, the report expects the RBI to cut the repo rate by another 50 bps, bringing it down to a terminal rate of 5.5%. This projection is based on an assumption of a neutral real interest rate of 1.5%.
Overall, the tone of the minutes and the Union Bank report suggest that the central bank is prioritizing growth as inflation risks appear to be easing.
