Rate setters hold, but the language shifts

The monetary policy committee held its benchmark rate steady for a fourth consecutive review, extending a pause that began earlier this year as the central bank waits for clearer evidence that inflation is settling durably within its target band.

What changed was not the number but the wording around it. The accompanying statement explicitly flagged food-price volatility — particularly in vegetables and pulses — as the principal source of near-term uncertainty in the inflation outlook, language that was noticeably absent from the previous two statements.

Economists tracking the committee's communications read the shift as an attempt to manage expectations rather than to signal any near-term change in direction. "The committee is telling markets it isn't done watching, without committing to a direction," said a rates strategist at a domestic brokerage. "That's classic pause-extension language."

The vote itself was not unanimous. Minutes released after the meeting showed a split among members, with a minority favouring an explicit dovish tilt in the guidance, arguing that core inflation — which strips out food and fuel — has now cooled enough to justify preparing markets for an eventual cut.

Bond markets reacted modestly: the ten-year benchmark yield eased by a handful of basis points as traders trimmed bets on an imminent move in either direction, while the currency held broadly steady against the dollar through the session.

The next scheduled review falls after two more monthly inflation prints, which will weigh heavily on whether the guidance shifts further or the committee reverts to firmer language on holding rates through the rest of the fiscal year.