RBI's emphasis on loan transparency is a relief

Its cash reserve surprise is part of a broader effort to tame inflation and its framework for loans with floating rates should address customer dissonance over upward rate adjustments

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A mid anticipation of signals that would point to a post-pause pivot ahead in the Reserve Bank of India's (RBI) interest rate cycle, its hawkish policy undertone on Thursday must have let many down. Though RBI kept its main repo rate unchanged at 6.5% and stance focused on "withdrawal of accommodation," its inflation concerns set the stage for various scenes to unfold. To fend off a need to think beyond just pause or pivot when its rate-setting panel meets next, deft liquidity control will likely suffice. In a surprise move, RBI froze an extra slice of cash from bank deposits that must be held in reserve. A temporary measure in response to a swell-up from returned 2,000 notes (and other factors), this slurp-up should reduce the risk of spillovers that push prices up. Food prices remain a worry and uneven rainfall has clouded the farm scenario, even as other price pressures persist. By RBI's estimates, India's retail inflation could rise to an average 6.2% in the current quarter. For 2023-24, it is seen averaging 5.4% now, up fro