RBI policy: Rate pause season gets longer; Urjit Patel weighs risks

The repo rate was kept unchanged at 6.25%

The six-member monetary policy committee (MPC) kept the Reserve Bank of India’s policy rates unchanged on Wednesday. And, shifted the policy stance to “neutral” from “accommodative”, as it wanted to keep the flexibility to move either side, hike or cut, considering the uncertain inflation landscape.

Bond markets were shocked by the pause and change in policy stance. Yields on the 10-year government security jumped 32 basis points (bps) to close at 6.75 per cent, the steepest climb in a day since September 29, 2013.

According to credit rating agency CRISIL, the shift could “very well mark the end of the