The oil effect

Easing of crude prices, low food inflation lets off pressure on RBI to increase repo rate. Fiscal indiscipline can change the scenario

indian express editorials, india gdp, india gdp under nda, india economy, upa india gdp, modi economy, modi nda economy, india developnment growth, india news, indian express — RBI has also stuck to the stance of “calibrated tightening”, though one member voted for going back to the previous “neutral” position.

On October 5, when the Reserve Bank of India (RBI) did not raise its benchmark short-term lending (“repo”) rate, even while changing the monetary policy stance from “neutral” to “calibrated tightening”, the markets weren’t impressed. They had expected a minimum 0.25 percentage point increase in the repo rate, with one out of the central bank’s six monetary policy committee (MPC) members actually voting in favour of this. In its latest meeting on Wednesday, the MPC has unanimously decided to keep the repo rate unchanged at 6.5 per cent. It has also stuck to the stance of “calibrated tightening”, though one member voted for going back to the previous “neutral” position.