Retaining policy flexibility

Inflation remains a concern for the RBI

The Monetary Policy Committee (MPC) ended its last meeting for this fiscal year on Wednesday with another 25-basis-point increase in the policy repo rate to 6.5 per cent. The standing deposit facility and marginal standing facility rates were accordingly adjusted to 6.25 and 6.75 per cent, respectively. While the rate action was on expected lines, the communication from the Reserve Bank of India (RBI) did not explicitly indicate that the committee will pause at the current level as many analysts were expecting. The biggest reason for this is that the central bank intends to keep its options open. It is