A change in stance now would have made it possible for a rate cut later this calendar year, if the growth impulse turned weak. This reasoning seems to have prompted two of the six MPC members to take a contrary, dovish stance at the June meeting and this one. It has significantly termed food inflation as “persistent” and not “transitory”. A vigil on inflation would perhaps not have been compromised by relaxing the liquidity stance to neutral to lift sentiments. The prospect of global rates being eased allows the RBI to relax its stance without outflow worries.

Source: The Hindu August 09, 2024 03:43 UTC