3 min readAug 22, 2026 06:45 AM IST First published on: Aug 22, 2026 at 06:45 AM ISTIn its last meeting, the RBI’s Monetary Policy Committee voted unanimously to keep the benchmark repo rate unchanged at 5.25 per cent. The tone of the policy was more dovish than many at that time had expected. This led to a view among analysts that rate hikes were not imminent even as inflation was projected to be above target. But the minutes of the same meeting, released a few days ago, suggest that the current situation is unlikely to be maintained over the near term. The divergence is striking.The members from the central bank on the committee displayed a distinct hawkishness. As a report by economists at the SBI says, “the Governor MPC minutes statement shows inclination towards policy tightening… DG, RBI calls for a possible rate hike later in the year, while ED, RBI just stops just short…” Alongside, external members on the committee like Saugata Bhattacharya and Ram Singh have drawn attention to the real interest rate. The RBI’s own inflation projections point towards negative real interest rates — it has pegged inflation at 5.9 per cent in the third quarter, 5.5 per cent in the fourth quarter, and 5.3 per cent in the first quarter of the next financial year. This implies that real interest rates are negative on a forward basis. Negative real rates are for stimulating economic activity, unlike the stated neutral stance the committee has adopted, which as the RBI Governor has noted in the past, implies no support for economic activity or for controlling inflation. This is also odd considering the central bank’s views on “resilient” growth. “Growth continues to be supported by resilient domestic demand, sustained expansion in manufacturing and services activity, and robust exports,” it notes.AdvertisementAcross the world, central banks are grappling with uncertainty over inflation and the course of monetary policy. In the US, for instance, even as the Federal Reserve maintained interest rates in July, the path of monetary policy remains unclear. According to the minutes of the Fed meeting, “several participants favoured an increase of 25 basis points in the target range”. By the time the MPC meets next in October, there should be more clarity on agriculture and the trajectory of inflation. The central bank’s inflation projections will shed light on its expectations of the underlying price pressures in the economy going forward. These could lead to adjustments in the policy rate.