In fact, the divergence is particularly pronounced in “policy and rates” and “inflation and prices”, suggesting that the minutes attach greater weight to the risks most relevant for the future rate trajectory, whereas the Governor’s communication tends to attenuate these concerns and give relatively greater weight to growth and financial conditions. As a matter of fact, in terms of macro tones, if the Governor statement is indexed to 1, the MPC minutes statement is at 1.76 in June 2026 and it rises further to 1.82 in August 2026. A higher number relative to 1 indicates more hawkishness. 

The policy dilemma for markets is therefore increasingly a “chalk or cheese” problem: should investors read the hawkish undertone of the minutes as a signal that an October rate hike remains on the table, or follow the Governor’s more cautious wait-and-watch communication? We believe, even though the window of a rate hike (s) has now opened up, such a decision still hangs in delicate balance primarily because of 2 reasons. 

Firstly, U.S. economy showing resilient growth driven by consumer spending and artificial intelligence investment, but facing notable downside risks. These risks include cooling non-farm payrolls—marked by a surprise contraction in July—and an unsustainable national debt trajectory leading to elevated long-term borrowing costs. 

Against this backdrop, the Treasury has doubled its buyback of longer-dated securities from $2 billion to $4 billion at least per operation from September 9, aiming to support bond prices and ease pressure on long-term yields. With Jackson Hole scheduled for August 27–29, markets will now look for signals on the Fed’s rate path, particularly as higher oil prices and geopolitical risks could keep inflation concerns elevated. In fact, the cue of even larger buyback was clear when US Treasury Secretary in an interview on Friday emphasized again that “We will just grow our way out of $40 trillion debt”. It looks in-creasingly unlikely that the Fed is going to hike soon in September as a bond buy back program and a rate hike are mutu ally incongruous. With no cap on interventions, there may be even a probability of Fed coming on stage with a quasi QE (Treasury can’t do this buyback forever on its own as it does not print money) which complicates the plot in sync with YCC (Yield Curve Control) to keep long-term yields in check, going against the core philosophy of Warsh, keeping the Fed balance sheet in check. Increase in short term rates might also result in capital outflows from emerging economies including India. 

Secondly, in terms of domestic conditions, the progress of monsoon is erratic and highly uneven. While the nationwide shortfall is ~13% only, the spatial distribution shows major foodgrains producing states like Bihar(-41%), An dhra Pradesh (-39%), Punjab (-32%) & Karnataka (-22%) in huge deficit. Out of total 741 districts, 351 districts has received deficit rains so far. Skymet has recently revised its monsoon 2026 forecast, downgrading it to 85% of LPA with a 70% proba bility of drought, amid escalating concerns over El Nino. As per Australian Bureau of Meteorology, El Niño is firmly estab lished. As of 16 August 2026, the weekly Indian Ocean Dipole (IOD) index is +0.18 °C (lowest in 5 weeks) and neutral. 

We thus suggest, it might be more important to now address monsoon risks through carefully crafted domestic policies addressing rural economy concerns. As an example, the newly launched VB-G RAM G program shows that July & August 2026 data indicate a 60% decline in person days generated. Out of the 19-major states, only 2 States, AP & Telangana show increase in person days. The next couple of months should see this newly launched rural employment guarantee programme scaled up further. If this is so, an expansionary fiscal policy through higher allocation through VB-G RAM G but possibly a tighter monetary policy (through rate hikes) may be difficult to comprehend together !