Rate hike chances ‘negligible’ in near term: RBI MPC member

The possibility of an increase in the benchmark interest rate in the near term is “negligible,” according to Saugata Bhattacharya, an external member of the Reserve Bank of India’s Monetary Policy Committee (MPC).

In an interaction on Wednesday, Bhattacharya said that despite emerging inflationary pressures due to geopolitical tensions, there is little need to raise the repo rate immediately. The MPC earlier this month unanimously decided to retain the repo rate at 5.25 per cent, continuing with a neutral policy stance.

He cautioned that risks to consumer price inflation (CPI) persist. Weather-related uncertainties, rising metals prices and elevated crude oil costs amid global tensions may exert pressure going forward. CPI is projected to move towards the 4 per cent target in the first half of FY27, partly due to base effects from softer headline and vegetable inflation in FY26 and the impact of precious metals prices. However, underlying inflation excluding these components is expected to remain benign.

Bhattacharya said there are no signs of economic overheating despite multiple stimulus measures. The RBI has reduced rates by 125 basis points since February 2025, its sharpest easing cycle since 2019, including a 25 basis point cut in December. Rates were unchanged in August, October and February 2026.

On credit growth, he noted improved momentum. Bank lending to large corporates rose 7.5 per cent year-on-year in December 2025, while mid-corporate credit expanded around 20 per cent. MSME credit surged 29 per cent, and lending to NBFCs nearly tripled. Capacity utilisation remains around 75 per cent, with higher levels in some sectors.

Domestic consumption, contributing nearly two-thirds of GDP, remains the key growth driver. He also highlighted strong PMIs, resilient exports and record e-way bills as indicators of sustained economic activity.