The Reserve Bank of India has often faced criticism for being ‘behind the curve’ in itsmonetary policy actions. In 2022, it was faulted for raising the repo rate too late when inflation was surging above the medium-term target. By the second half of 2024, it was blamed for not cutting the repo rate, even as disinflation had set in.This year, however, the RBI has taken a more aggressive stance, delivering three consecutive repo rate cuts in February, April and June. Yet, these moves have not translated into stronger bank credit growth or improved corporate profitability. Is this a case of ‘too little, too late’, or will monetary policy prove prescient this time? To answer that, we must first look at bank lending rates and credit growth, which are key to the economy’s fortunes.
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