MPC opts for caution amid tariff uncertainty

The Reserve Bank of India's six-member monetary policy committee (MPC) opted for a wait-and-watch approach in the August policy, flagging the need to assess the full impact of recent rate cuts and monitor risks from the US tariff actions, minutes of the August meeting released on Wednesday showed.

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"Considering all these, especially the current state of uncertainty on the external front, the monetary policy needs to remain watchful," RBI governor Sanjay Malhotra said.

MPC member Rajiv Ranjan said this was "one of the most difficult meetings in terms of deciding on the future course of the monetary policy". He said the clarity on tariffs and their impact on the economy will emerge in a few months. However, the prudent course of action is to allow the recent policy easing to transmit fully in the economy. "An additional rate cut at the current juncture could also reduce our policy space should global or domestic risks materialize," Ranjan said.

MPC member Nagesh Kumar said preliminary calculations suggest these tariffs may hurt the growth rate in the current year by 20-30 basis points.