Course correction

RBI has been slow in withdrawing accommodation

The Reserve Bank of India (RBI) has eventually decided to adjust to the evolving economic reality. The Monetary Policy Committee (MPC) in an “off-cycle” meeting, which ended on Wednesday, increased the policy repo rate by 40 basis points with immediate effect. The standing deposit facility and the marginal standing facility rates have been adjusted accordingly. The RBI also increased the cash reserve ratio (CRR) by 50 basis points to 4.5 per cent of net demand and time liabilities, effective from May 21. The rate-setting committee had left the policy rate unchanged in the April meeting, though the RBI introduced the