Case for a pause

RBI should hold rates, but address tight liquidity

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) is due to meet in the first week of December, and expectations from the government to cut the policy interest rate, currently at six per cent, continue to be high. The government’s argument is simple. In its last statement after its October meeting, the MPC had highlighted some actions it expected the government to take, including moving forward on the insolvency process and cleaning up the implementation of the goods and services tax, or GST. On both these fronts, there has been a reasonable amount of action since