Wise caution

RBI shifts stance, mindful of uncertainty

The Reserve Bank of India’s sixth bi-monthly monetary policy for 2016-17 will have surprised most onlookers. Strong hopes had been expressed — hopes hardening, in fact, to near confidence — that RBI would cut the policy rate by at least 25 basis points (a quarter of a percentage point). However, the central bank, in fact, did no such thing. Not only did it hold the policy repo rate constant at 6.25 per cent, it also indicated that the monetary policy stance was now neutral, rather than accommodative. The decision was taken with the support of all six members of the