The Reserve Bank of India (RBI) seems to have taken an over-cautious stand by opting for a status quo on interest rates. In its first bimonthly policy of the current fiscal year, the RBI’s inflation projection is 2-3.5 per cent in the first half of the year and 3.5-4.5 per cent in the second half. This is substantially lower than its earlier projection of 4.5 per cent in the first half of FY18 and 5 per cent in the second half. At the same time, the forecast on gross value added (GVA) growth has been mildly reduced to 7.3 per cent. Even then, all that the RBI has done is to maintain its neutral policy stance, citing inflation risks on which it apparently wants to get more clarity. The policy statement says at the current juncture, “global political and financial risks materialising into imported inflation and the disbursement of allowances under the Seventh Central Pay Commission’s award are upside risks, though the implementation of the goods and service tax is not expected to have a material impact on overall inflation”.