A watchful pause

The outcome of the meeting of the Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) on Thursday checked all the necessary boxes. As was widely expected, the six-member committee left the policy repo rate unchanged at 6.5 per cent, despite the anticipated surge in the Consumer Price Index-based inflation rate at least for July and August. The MPC, in fact, also revised its inflation projection for the second quarter of this financial year to 6.2 per cent, which is higher than the upper end of the tolerance band. However, in spite of the expected surge, the MPC rightly decided to see through it because the rate is primarily being driven by food prices, particularly vegetables, and they are expected