Das walks the talk

The pitch was rough with the clamour for a repo rate cut growing by the day, especially after the shocking 5.4% GDP growth in the second quarter of this financial year.

- JOYDEEP GHOSH

●MPC holds rates, cuts CRR to inject ₹1.16 lakh crore

•FY25 growth estimate cut to 6.6%, inflation target upped to 4.8%

Even before that, at least two Union ministers went public with their call for a rate cut.

But in the last monetary policy of his current tenure, RBI governor Shaktikanta Das stood his ground firmly and left the benchmark rate unchanged at 6.50% for an 11th straight policy meeting. This, despite dissent from two members of the monetary policy committee (MPC) — Nagesh Kumar and Ram Singh.

"In the life of a central bank, there is no room for knee-jerk reaction," said Das, adding more "credible evidence" is needed on the outlook for inflation. "Our effort has been to remain in line with the curve, never fall behind the curve and I think we are following that trend," he said.

Like a veteran batsman, however, Das gave a glimpse of his flexibility by taking steps to boost liquidity in the banking system and stem a decline in the rupee. The cash reserve ratio — the proportion of deposits that banks must set aside with the RBI — was lowered by 50 basis points to 4%, to address a potential cash squeeze. The CRR cut — for the first time in four years — will inject ₹1.16 lakh crore into the banking system.