CPI inflation came at 18 month low at 4.7% and RBI’s repo rate is 6.5%.Almost a 1.8% positive real interest rate. I doubt if we ever had a higher spread than this
Even developing economies do not have this much difference in their real interest rates and US just in this month reached the positive real interest rate territory again.
For a developing economy like ours, too much of real positive interest rate isn’t appropriate as the focus on growth becomes key once inflation is under control.
