December monetary policy a close call; all eyes on RBI's communication

With inflation at a record low of 0.25% and robust GDP growth, the RBI faces a close call between supporting the economy and a weakening rupee

Those who were expecting a pre-Diwali gift from the Reserve Bank of India (RBI) in October were disappointed when the Indian central bank’s Monetary Policy Committee (MPC) left the policy repo rate unchanged at 5.5 per cent. On December 5, when the MPC ends its three-day bimonthly monetary policy meeting, the last in this calendar year, will RBI Governor Sanjay Malhotra play the Santa Claus and bring an early Christmas? 

After the status quo in two successive monetary policies of August and October, it will be a close call in December.

 

The growth-inflation dynamic