Macroeconomic risks arising from domestic weakness and global uncertainty came to the fore during 2013-14 following the US Fed’s indication that it would taper its large-scale asset purchase programme. The Reserve Bank responded through several policy actions to mitigate the risks to macro-financial stability. It aimed at containing exchange rate volatility, compressing the current account deficit (CAD) and rebuilding buffers. It also accorded primacy to containing inflation, the persistence of which over the years had caused several macroeconomic imbalances. Though these measures helped in stabilising the economy, keeping it on a disinflationary path, the slowdown continues to pose policy challenges into 2014-15. The economy requires policies that address growth through increased productivity, as well as greater investment and use of labour.