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RBI minutes temper rupee rate-cut hopes amid conditional inflation risks

DBS analysts say the early-August RBI minutes showed a more neutral-to-cautious stance, with a deputy governor pushing back on rate cut expectations.

Reported · Written up by our desk · Central Banks

FXStreet highlights that RBI minutes from the early-August meeting were more cautious than Governor Sanjay Malhotra’s public messaging, according to analysis from Radhika Rao at DBS Group Research.

DBS said most members took a neutral-to-cautious stance, while Deputy Governor Poonam Gupta pushed back more firmly against rate cut expectations. The RBI governor, in contrast, backed a pause view but indicated a need for broad-based policy tightening if inflation quickens.

The outlook for inflation was described as conditional on monsoon performance, El Niño risks, and geopolitical developments, which could keep tightening risks in play.

DBS noted the contrast between the minutes and the governor’s messaging, with four members in the minutes leaning toward neutral-to-cautious, and Gupta striking a firmer tone that effectively cooled rate-cut hopes.

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