RBI policy minutes: Governor backed neutral stance to 'cut, pause or hike rates'; Five of six MPC members supported 'front-loaded' easing
RBI Governor Sanjay Malhotra said a front-loaded interest rate cut would offer clarity and confidence to economic agents and support growth as the global environment remains volatile, according to minutes of the June monetary policy meeting released on Friday.
The Monetary Policy Committee (MPC), headed by Malhotra, cut the
repo rate
by 50 basis points on June 6, marking the second such move in a row and bringing the cumulative reduction to 100 bps. The panel also shifted its stance from 'accommodative' to 'neutral' and announced liquidity measures to reinforce the easing.
While five of the six members voted in favour of a 50 bps cut, external member Saugata Bhattacharya opted for a more cautious 25 bps reduction, citing prevailing global uncertainties.
Citing inflation easing from 6.2% in October 2024 to 3.2% in April 2025, and projected to average 3.7% this year, Malhotra said: 'It is expected that the front-loaded rate action, along with certainty on the liquidity front, would send a clear signal to the economic agents, thereby supporting consumption and investment through lower cost of borrowing.'
He added that a neutral stance offers flexibility to cut, pause or hike depending on incoming data and global conditions: 'This package of measures will provide some certainty in times of uncertainty and is expected to support growth.'
Deputy Governor Poonam Gupta also backed a 50 bps cut, arguing that it would help signal policy certainty and accelerate transmission. Executive Director Rajiv Ranjan agreed, saying the move was appropriate to address growth, inflation and transmission concerns. However, he cautioned that: 'A 50 bps cut with an accommodative stance could mislead financial markets about the scale and scope of further monetary easing.
'
External member Ram Singh called for caution, citing uncertain global growth and inflation trends: 'A staggered rate cut can further delay the materialisation of demand and investment decisions.'
Bhattacharya, the lone dissenter on the size of the cut, said: 'Recognising the prevailing uncertainties, a measured and cautious progress in policy easing is more appropriate at this time.'
Another external member Nagesh Kumar highlighted weak transmission and slow credit growth, especially in public sector banks, noting: 'A double dose of a rate cut is likely to bring down lending rates significantly, helping to spur investment and consumption of durable goods.'
The next meeting of the MPC is scheduled for August.
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