RBI's New Stance: A Balancing Act for Growth and Inflation

In a pivotal move, Reserve Bank Governor Sanjay Malhotra unveiled critical shifts in the country's monetary policy framework. During a media briefing on Friday, Malhotra emphasized that future policy decisions would pivot on the twin metrics of economic growth and inflation.

The Reserve Bank of India (RBI) surprised markets with a 50 basis point cut in the repo rate, coupled with a 1 percentage point reduction in the cash reserve ratio (CRR). This shift from an 'accommodative' to a 'neutral' stance aims to accelerate credit growth and bolster broader economic progress.

Malhotra underscored the importance of swift transmission in the financial ecosystem, encouraging stakeholders to contribute to growth. With limited RBI firepower, the onus now partially rests on other economic actors to drive GDP growth towards aspirations of a 7-8 percent annual rise.

(With inputs from agencies.)