A policy pivot is not on the central bank's cards

Inflation uncertainty means an extended wait for a shift in RBI's stance that could lead to a rate cut. Luckily, policymakers are placed well to keep their focus firmly on price stability

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After a broadly non-inflationary budget, central-bank watchers were looking for a signal of when policy easing could begin. The Reserve Bank of India (RBI) offered no hint on Thursday when it declared the outcome of its latest policy review. Not only did it leave its key rates steady, it held on to “withdrawal of accommodation" as its stance, with a hawkish eye on inflation that pushes forth expectations of a repo rate cut well into the next fiscal year. This rate, at which RBI lends overnight money to banks, stays at 6.5% for now. Other linked rates are also unmoved as a result. Even though average inflation dipped to 5.5% during April-December 2023 from 6.7% in 2022-23 and is tipped to ease further to RBI’s 4% target by the July-September quarter, it is projected to reach 4.6% and 4.7% respectively in the subsequent two quarters. For RBI to earn its spurs as an inflation-vanquisher—though it has had some government help—it needs the transmission of its past actions complete and price stability achieved durably. “The job is not yet finished, and we n