New Delhi, Oct. 23 -- The minutes of the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) meeting held earlier this month were eagerly awaited for two reasons. One, for the first time in RBI governor Sanjay Malhotra's term, the MPC voted for a hike in policy rates. Two, after a long time, the opinions of members differed on the policy stance.

While the reasons for the change in stance-from neutral to calibrated tightening-are not entirely clear, most MPC members seem to have realized that they misread the inflation outlook and the liquidity position at the last meeting in early August.

Both the governor and the deputy governor were far more sanguine about the inflation trajectory in August. They seem to have underestimated ...