Macro backdrop calls for status quo on rates

The MPC in all likelihood would keep the repo rate unchanged at 4 per cent, extending the pause from its August and October meetings and reiterating the accommodative stance

The macroeconomic backdrop for the December Monetary Policy Committee (MPC) meeting is one of recovery gaining traction from a recession, on one hand, and CPI inflation holding well above the upper-end of the target band of 6 per cent for five consecutive months, on the other.

Official estimates of the second quarter gross domestic product (GDP) showed that in a multi-speed recovery, manufacturing sector helped both by improving domestic trade and external demand is normalising, even as farm sector continues to show positive growth, while services sector is lagging. PMI data for the current quarter shows that manufacturing sector activity picked