Unambiguous commitment: MPC wants the disinflation process to be completed

Monetary policy committee's shift offers flexibility but no signal of rate cuts; RBI Governor highlights inflation and stability as key priorities

The monetary policy committee (MPC) of the Reserve Bank of India (RBI), which reviewed the policy with new external members this week, decided to leave the policy repo rate unchanged at 6.5 per cent. The MPC, however, decided to change the policy stance to “neutral” from “withdrawal of accommodation” to give itself more flexibility as was expected by some market participants. But the shift should not be seen by the financial market as an indication of a policy-rate cut in the December meeting. While some large central banks, including the US Federal Reserve, have reduced policy-interest rates,