For five consecutive policy reviews in 2023, the Reserve Bank of India (RBI) chose to hold rates, citing inflation threat.
And when the prices did cool off a bit, it reminded all about the target to get the headline consumer price inflation at 4 per cent and the risks from food inflation.
Heading into the new year, all eyes are on when RBI will cut the rates, especially after one of the Monetary Policy Committee (MPC) members stressed on the need for such an action in the face of the US Federal Reserve's guidance for easing rates.
Also, some analysts point to the Consumer Price Inflation (CPI) falling below the 4 per cent mark in mid-2024 and then, there will be prospects of a rate cut.
RBI Governor Shaktikanta Das, who is into the last year of his second three-year term at the helm of the central bank, has been steadfast in highlighting the need to get the inflation down to 4 per cent on a durable basis.
CPI cooled off to a four-month low of 4.87 per cent in October but rose to 5.55 per cent in November.
After announcing the December monetary policy review, Das said that "loosening in rates is not on the table at all" till the inflation demon is chained at or is under 4 per cent for a durable time.
In December, he said the future is "very fickle", where any shock can hit the economy.
The policy stance has continued to be "withdrawal of accommodation" through the year and will be relooked only when inflation reaches the target zone for a "durable time", Das had said.
Episodic rise in inflation like the one fuelled by sky-high tomato and onions prices in the latter half of the year has made the central bank's warnings on potential troubles from food inflation feel more real.
The Monetary Policy Committee (MPC) has the mandate to keep inflation at 4 per cent, with a margin of 2 per cent on either side.
Post general elections, the central bank will be keenly watching the actions of the new government to decide on its policy rate and liquidity strategies.
Into his sixth year as the Governor, Das had taken over the reins at a tumultuous time for the institution on December 11, 2018 after the surprise resignation of his predecessor Urjit Patel and then navigating through the pandemic mayhem.
Das has been feted the world over for his leadership and he was also chosen for the best central banker award this year.
With the bureaucrat-turned-central banker at the helm, relations between the Mint Road and North Block has been cordial, barring his continued opposition on crypto currencies.
Das has also flagged risks in the financial system and kicked off a series of addresses from May 2023 to bank boards and their managements.
He had told them that the central bank's periodic inspections have revealed lapses in corporate governance, smart accounting practices to inflate profits and also attempts at evergreening of loans.
The mid-December notification prohibiting banks to lend to an entity that has bets in an Alternative Investment Funds (AIFs) is seen by many as a fallout of such concerns.
After warning about potential risk build-up on the unsecured loans front, the central bank has followed it up with a notification to massively jack up the risk weights on unsecured loans in November, rattling the credit market and more so non-bank lenders which have been underwriting such loans.
To clip the wings of large corporate which bargain for cheaper loans for their lower-rated connected entities, the regulator said it will soon introduce curbs on such lending.
The central bank ensured that the mega-merger of the HDFC twins happened smoothly.
Apart from the entrenched entities, the challenge from new age entities indulging in lending activities continued in 2023.
Such activities are expected to grow bigger as newer attempts continue at disrupting the game, according to experts.
The central bank's policies over the years have come in for a lot of praise as the government propped the digital payments architecture through the year, and also made it into a key theme during the G20 presidency.
In the new year, the RBI will also focus on promoting the Central Bank Digital Currency (CBDC) so that it reaches a critical mass in terms of volume.
