RBI MPC minutes: Persistent volatility in international markets contrasts with India’s resilient financial momentum

The February 4–6 assembly of the RBI’s Financial Coverage Committee (MPC) highlighted rising nervousness amongst international traders as monetary markets proceed to witness heightened volatility. Persistent geopolitical tensions and abrupt commodity worth actions have led to unpredictable swings throughout worldwide markets. This instability has triggered threat aversion and sharper scrutiny of rising markets, together with India, at the same time as home macro indicators stay resilient.

Latest deliberations by the RBI’s rate-setting panel underscored that, regardless of international uncertainty, India’s financial momentum stays sturdy. The committee, chaired by Governor Sanjay Malhotra, famous that “financial momentum stays resilient regardless of international volatility, with FY26 progress estimated at 7.4% and projections for the primary half of FY27 nudged as much as about 6.9–7.0%, helped by sturdy home demand, funding exercise, and up to date commerce offers anticipated to carry exports and capital inflows.”

In his MPC summation, Governor Malhotra noticed: “Regardless of escalating geopolitical tensions and growing commerce frictions posing big challenges, international progress, supported by a surge in technology-related investments, conducive fiscal and financial insurance policies, and accommodative monetary circumstances, is anticipated to be marginally increased in 2026. Inflation outcomes could stay divergent throughout international locations; accordingly, central banks are more likely to tread dissimilar coverage paths whereas approaching the top of their easing cycles. Within the backdrop of enormous fiscal stimulus and geopolitical uncertainty, international investor sentiments are nervous and monetary markets stay unstable.”

The minutes indicated that sustained home consumption and funding have helped offset a part of the drag from exterior shocks. Enhancements within the enterprise setting and ongoing structural reforms have strengthened the muse for medium-term progress. These elements have supported continued investor confidence, each home and international, regardless of international headwinds.

CPI inflation

India’s inflation trajectory additional differentiates it from international turbulence. Headline Shopper Worth Index (CPI) inflation stood at 0.7% in November and 1.3% in December, with the committee projecting a modest 2.1% for FY26. Inflation is anticipated to edge towards the 4% goal in early FY27, largely as a consequence of base results and better treasured steel costs fairly than broad-based demand pressures.

The committee emphasised that these projected will increase are more likely to be short-term. As recorded within the minutes, “Members stated underlying inflation excluding such unstable parts stays muted, suggesting little threat of overheating.” Subdued core inflation displays steady supply-side circumstances and the lagged influence of earlier financial tightening, which has helped anchor inflation expectations.

Financial coverage stance

Given the evolving setting, policymakers have adopted a cautious strategy. Most members favoured sustaining the present coverage stance till the influence of earlier price cuts is absolutely transmitted and the revised GDP and CPI knowledge are completely assessed. Whereas one member advocated a shift towards an accommodative stance, the broader consensus is to pause and monitor developments.

The introduction of a revised CPI sequence — with 2024 as the brand new base yr as an alternative of 2012 — is anticipated to enhance inflation measurement accuracy and improve coverage calibration.

Guarded optimism amid exterior dangers

Analysts notice that India’s mixture of agency progress and subdued inflation locations it in a comparatively beneficial place globally. Nevertheless, the minutes replicate calibrated optimism: “Exterior dangers from geopolitics, commodity swings and financial-market volatility persist, however the home macro stability has improved sufficient for the panel to look at and wait fairly than transfer.”

General, whereas international volatility stays elevated, India’s macro fundamentals present stability. The RBI’s technique stays data-driven, balancing vigilance in opposition to exterior shocks with confidence in home resilience.