India to appoint new MPC members ahead of key interest rate meeting

Indian authorities will appoint new external members of the central bank’s monetary policy committee by October at the latest, people familiar with the matter said, ahead of a key meeting where the monetary policy committee (MPC) will face downward pressure on interest rates.

A selection committee that includes the Reserve Bank of India governor and government officials will recommend likely candidates in the next two weeks, the people said, asking not to be identified because the talks were private. An announcement is likely to be made in late September or early October.

The six-member MPC comprises three external members and three RBI officials, headed by Governor Shaktikanta Das. The external members, usually renowned economists with academic backgrounds or specialists in finance and macroeconomics, are appointed for a four-year term. The current terms of external members Jayantha Varma, Ashima Goyal and Shashanka Bhide end on October 4. The next scheduled decision on interest rates is due on October 9.

The six-member selection panel — comprising Das, Cabinet Secretary TV Somanathan, Economic Affairs Secretary Ajay Seth and other officials — will need to avoid a repeat of 2020, when a delay in appointing external MPC members forced the RBI to postpone a scheduled rate meeting, which added to policy uncertainty at the time and drew criticism from analysts.

Spokespeople for the Ministry of Finance and the RBI did not immediately respond to requests for information.

The appointment of the new MPC comes against a backdrop of a shift in policy among global central banks. The Federal Reserve is expected to cut interest rates as early as September, prompting central banks elsewhere to take action to head off market turmoil. In the Asia-Pacific region, New Zealand and the Philippines have already cut rates.

The RBI has left its benchmark interest rate unchanged for more than 18 months, and Das has been reluctant to ease policy until inflation stabilizes around the central bank’s 4 percent target. The two current external members, Varma and Goyal, voted to cut rates at the August policy meeting.

Most economists do not expect the RBI to ease borrowing costs before the final quarter of this year, predicting it will likely do so only after the Fed changes course. But some say there are signs that consumer demand is weakening and interest rates should be lowered to support growth.

The changes to the MPC come as the government begins the process of revising the Consumer Price Index, which could see the share of food in prices cut significantly — a move that could curb future inflationary increases in India.

The Reserve Bank of India’s (RBI) inflation targeting framework will also be reviewed in March 2026, with a growing debate in official circles on whether food prices should be excluded from the target.