Inflation, Budget and its implications: RBI's two guiding forces on rates

The other signals expected from the policy related to the rollback of measures announced during the pandemic

The guiding forces for Friday’s monetary policy committee (MPC) decision were twofold. The first was inflation, which has been trending downwards and likely to also be lower in January. Was this sufficient a trigger for lowering rates considering that the base effect will get weaker in February and March?  The second was the Budget and its implications. The indication given was that government borrowing would be higher for fiscal 2020-21 (FY21), for which the Reserve Bank of India (RBI) has already provided the schedule for next two months. FY22 will also involve heavy borrowing by the centre and states, which