MUMBAI: Since the institution of the monetary policy committee (MPC) under RBI governor Urjit Patel as the chairman in June 2016, establishing the flexible inflation-targeting framework, the rate-setting panel has met 59 times, with the first meeting in October 2016 and the 59th and most recent one in February 2026. Of these 59 meetings, only 12 delivered repo rate cuts while 16 saw repo hikes and the remaining 31 saw no actions.
By law, every fifth year, the government, along with the Reserve Bank, has to review the flexible inflation-targeting framework, with the upcoming review slated for March 31. The first review of the framework was held in March 2021 which retained the framework for a second five-year period ending March 31, 2026.
No Mint Road observer is expecting any changes to the 4%, with a 2% leeway either way, inflation target being set for the central bank, which has to report to Parliament if it failed to contain retail inflation within the target for three consecutive quarters. In the 10 years of the MPC, the RBI under governor Shaktikanta Das had to report to the House only once when inflation crossed the upper band of 6% for three quarter during the pandemic era.
Another interesting aspect of the MPC is that most of these 24 rate actions happened when the monetary policy stance was neutral, indicating the central bank’s willingness to be nimble and be ready to act when the situation warrants, according to an analysis of the 59 MPC meetings by SBI Research.
Another aspect is that there were two full years—2021 and 2022—when the repo rate was on hold at 6.5% with Das at the helm.
Also, rate actions under Urjit Patel had the least unanimity, with only 46% actions getting all-six votes, and an equal number getting split views, with dissenters at only 8% of the meetings. On the other hand, during the tenure of the current governor Sanjay Malhotra, who delivered four rate cuts in his first 12 months that began in December 2024, as much as 86% of the decisions have been unanimous, with no dissenters and only 14% split calls. On the other hand, Das had only 59% all-six votes, 32% dissenters, and the rest split votes.
“We have seen lower episodes of rate hikes post formulation of the inflation targeting regime. During 2010-15, there were 16 episodes of rate hikes and only 8 rate cuts. The central bank’s rate actions are mostly aligned with the stance except a few aberrations and most of such actions happened during the periods of neutral stance, indicating central bank willingness to be nimble and be ready to act in any direction in an era of uncertainty,” Soumya Kanti Ghosh, the chief economic advisor to the State Bank of India, said in a note.