SBI report flags RBI’s ‘chalk and cheese’ policy signals

A State Bank of India research report released on Monday said the Reserve Bank of India's recent policy communications have sent conflicting signals on inflation and interest rates, creating uncertainty for markets. The report compared the minutes of the Monetary Policy Committee's August meeting, the monetary policy statement, and RBI Governor Sanjay Malhotra's remarks, and found divergent tones across all three.

SBI's Soumya Kanti Ghosh said the MPC minutes appeared more hawkish, emphasising inflation risks and leaving the door open for further tightening, while the Governor's statement was more patient and data-dependent, focusing on growth. SBI built a tone index with the Governor's statement as 1, the MPC minutes scored 1.76 in June 2026 and 1.82 in August, with any reading above 1 signalling greater hawkishness.

The report said the window for an October rate hike had opened but the decision remains finely balanced due to global and domestic uncertainties. It flagged uneven monsoon progress and rural distress in key foodgrain-producing states as key concerns, suggesting these should take precedence over monetary tightening.