We are seeing strategic stillness but with some subtle shifts. India’s macro picture is calm on the surface but shifting underneath. The Reserve Bank of India (RBI) has held its line, but banks are already moving. Inflation is at record lows - though not for long. The Rupee looks steady, yet forward signals tell a different story. Labour data is showing strength and strain all at once. In short, policy discipline is intact but the adjustment phase is still playing out.
Monetary Policy
The RBI left the repo rate unchanged at 5.5% this month, reaffirming its neutral stance. The easing cycle looks done for now. From where we sit we can see that the room for further cuts has narrowed. This is exactly the shift we anticipated - frontloading cuts early, then pausing to reassess as inflation troughs.[Backlink to July: “frontloading its moves while inflation sits below 4%”]
Lending Rates & Credit Conditions
Commercial banks have taken the lead, trimming MCLR rates across the board in Augus...
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