RBI monetary policy: How to ease without cutting rates

The path ahead also remains uncertain because it is closely tied to the path of the pandemic curve

The Reserve Bank of India (RBI) and its monetary policy committee (MPC) delivered a dovish policy package despite keeping policy rates unchanged.
 

With inflation above 6% for many months and high-frequency indicators suggesting that the economy has embarked on a recovery path, the macroeconomic backdrop going into the October policy meeting would have suggested prioritisation of inflation over growth.
 

However, this is far from the truth and the MPC has rightfully set the record straight by stating that it views current inflation as transient, whereas growth revival needs policy focus.
 

No doubt headline inflation is running close to 7%, but