RBI's concern for the economy is apparent in its moves

It all starts with some signalling, achieved largely through adjustment of liquidity and recalibration of benchmark rates as well as yield curves.

- RAJRISHI SINGHAL

Then comes nuanced communication, imploring economic agents to read between the lines, with the hope that this will help mould market expectations. In the final stage, there is active perception-building with pointed communication—both verbal and printed—to push economic activity along a chosen pathway. This is how many central banks usually try to shift strategy, hoping to nudge borrowers and lenders to act in a certain way. The Reserve Bank of India (RBI) has now added controlled but explicit gesturing to the array of communication tools at its disposal.

The monetary policy announcement of 1 October can be seen as a continuation of governor Sanjay Malhotra's unique way of conveying economic distress and putting in place policy measures that (he hopes) will lead to higher lending and borrowing, and thereby induce stronger economic growth.

The central bank is no longer beating about the bush; its concern for the economy is visible front and centre.

There was a broad-based expectation of an interest rate cut on the street, seen as the ideal cure for a slowing economy. But members of the monetary policy committee (MPC) felt otherwise, given that earlier rate cuts were yet to fully pass through the economy. In addition, the prevailing uncertainty over how the fiscal stimulus and US tariff tantrum would play out on consumption and production stayed the MPC's hand. But then, RBI'stool-kit had other instruments it could throw at the problem.