5 It is over to the next MPC now

With the benchmark inflation number staying below the 7% mark — something RBI governor Shaktikanta Das predicted while speaking at the HTLS on November 12 — it remains to be seen whether RBI will deliver yet another rate hike in its next MPC meeting scheduled in early December. It has already hiked policy rates by 1.9 percentage points in its current monetary tightening cycle. Higher interest rates, notwithstanding the benefits of a stable inflation environment in the medium to long-term, are bound to generate headwinds for future growth in the short-term. Minutes of the previous MPC meeting on policy rates suggest that there was already a difference of opinion on the question of whether or not an interest rate hike was desirable. It will be interesting to see whether the MPC makes a change in its stance in December or delivers yet another front-loaded rate hike to boost its inflation targeting credentials.