The state of the economy, as RBI would have seen it | Number Theory
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The Monetary Policy Committee (MPC) of RBI decided to maintain the status quo in its October meeting. Repo rate – the interest rate at which RBI lends money to banks – remains unchanged at 5.5%. Monetary policy stance continues to be neutral, which would suggest no urgency to bring down interest rates. And yet, the policy communication from the central bank has dropped enough hints about a rate cut in the December meeting. Growth continues to be “below aspirations” and “current macroeconomic conditions and the outlook has opened up policy space for further supporting growth”, Governor Sanjay Malhotra said after the MPC meeting. These statements have come despite the fact that the MPC has raised its full year (2025-26) growth projection from 6.5% to 6.8% between its August and October projections. How does one reconcile these seemingly contradictory hints in the MPC resolution? Here are four charts which answer these questions.
