An unexpected pause

Inflation remains significantly above the target

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), in its first meeting this fiscal year, surprised financial markets by unanimously deciding to leave the policy repo rate unchanged at 6.50 per cent. Most market participants, including eight out of 10 respondents polled by this newspaper, expected the rate-setting committee to increase the repo rate by another 25 basis points. But the MPC decided not to increase the policy rate further at this juncture, and assess how the cumulative rate increase so far works through the system. As RBI Governor Shaktikanta Das noted in his statement, the