RBI's MPC slashes repo rate once again, raises hope for more such cuts

An 'accommodative' stance effectively means that, absent any further shocks, the MPC is considering only two options - rate cut or a pause

The monetary policy committee (MPC) of the Reserve Bank of India (RBI) unanimously reduced the policy repo rate by another 25 basis points (bps) in its three-day meeting ended April 9 — in its second successive 25-bp cut. While a lowering of the rate was widely expected, the unanimous change in stance from ‘neutral’ to ‘accommodative’ took us by surprise. After all, as recently as in the February 7 policy meeting, the RBI governor had justified keeping a ‘neutral’ stance on account of excessive volatility in global financial markets, and global trade uncertainties. Given that such uncertainties had only heightened