'Policy rate likely to be low for a prolonged period'

Amid easing inflation, mixed growth signals, and evolving transmission dynamics, the MPC's December rate cut reflects a calibrated shift toward supporting momentum while remaining alert to emerging risks.

- SAUGATA BHATTACHARYA, MEMBER, MONETARY POLICY COMMITTEE

Saugata Bhattacharya, member of the Monetary Policy Committee (MPC), in a conversation with Mahesh Nayak, explains the rationale behind the vote, the data shaping future decisions, and the caution embedded in a neutral stance. Excerpts:

How decisive was the inflation undershoot in your 25 bps cut vote, and why?

At the December MPC meeting, the lower-thanexpected inflation prints provided room to act on the policy easing space that had opened up in October. With the real policy rate likely to remain restrictive over the next few months, and given the forecast inflation path, there was an opportunity to support growth - adding to the stimulus already built through monetary, fiscal, liquidity, and other measures.

What justified easing despite strong Q2 FY26 growth, and how do you guard against future structural inflation risks?