New Delhi, May 26 -- The credit policy to be presented in June will be quite different from earlier ones because there is a fine balance between both sides of the argument over a repo rate cut. This has rarely been the case in the past, when there was a compelling argument to either increase or decrease the policy rate or leave it unchanged. This unique situation can be attributed to the proactive approach of the Reserve Bank of India (RBI) in managing the environment related to interest rates.

Let us first look at the arguments that favour a rate cut. RBI made it clear in its last policy statement that a change in its stance to 'accommodative' is an indication of future rate cuts. Hence, the debate on whether such a stance meant there w...