RBI waits for FM

Monetary policy is most effective when it is unanticipated, and the Reserve Bank of India’s (RBI’s) decision to cut the cash reserve ratio, or CRR, for banks by 75 basis points on Friday was indeed unexpected. This is a pleasant change, for the central bank has in recent times chosen to focus on its regular schedule of reviews instead of responding to the needs of the market more spontaneously.

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