Tentative beginning

RBI's position is still fraught with risks

As widely expected, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) left the policy rate and stance unchanged on Friday. However, the resolution of the rate-setting committee and comments by Governor Shaktikanta Das have given an impression to many in the financial markets that the central bank has made a tentative beginning towards normalisation of liquidity and monetary conditions. There were two important signals in this context. First, Jayanth Varma, an external member, did not vote in favour of the resolution to continue with the accommodative stance as long as necessary. Second, the RBI intended to