New Delhi, Oct. 5 -- The Reserve Bank of India (RBI) used its last two credit policy announcements (on 5 June and 5 August) to convey a few key messages. The central bank kept the repo rate unchanged at 5.25% while maintaining a neutral stance, revised its growth and inflation forecasts, and chose to defend the rupee through concessional dollar-swap windows rather than through the policy rate.

It communicated and maintained a benign (albeit watchful) stance on rates. We had seemingly come a long way since the change in stance almost a year ago, and in both cases, the global macro appeared to be becoming hostile.

It's difficult to understand the motive behind such a calibration, given the severely aggressive macro headwinds emerging from...