RBI UNLOCKS ‘GOLDILOCKS’ PHASE OF GROWTH, RUPEE NEW BALANCING CONCERN

AFTER a brief pause, the RBI on Friday resumed monetary easing, reducing the repo rate by 25 basis points to 5.25 percent, the lowest in over three years.

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Analysts expected the central bank to hold fire amid robust growth in the July-September quarter, but the RBI reminded that monetary policy is rarely a rearguard action and more a forward march. As a rate change is transmitted with a lag, the reduction is perhaps a sign of anticipated subdued macroeconomic environment, at least in the first few months of 2026. Former Governor Raghuram Rajan noted that we can either have low rates or low inflation, not both. But that’s exactly what's happening now. With the central bank keeping the door open for further cuts, the question is how much room does it have? The markets are factoring in 5-5.25 percent as the likely floor this fiscal, thoug