(Eds: Repeating after adding words in para 5) Kolkata, Jun 8 (PTI) The Reserve Bank of India’s decision to keep policy rates unchanged was on expected lines, banking and financial experts said on Thursday.
The Monetary Policy Committee (MPC), which has three members from RBI and an equal number of external experts, voted unanimously to keep the benchmark repurchase, or repo rate unchanged at 6.50 per cent.
Punjab National Bank MD & CEO Atul Kr Goel said that keeping policy rates unchanged was “in line with the market expectations” in view of easing retail inflation and anticipation of a further decline.
He also said that maintaining the growth projection of GDP for the current financial year at 6.5 per cent reflects that RBI remains sanguine about economic growth.
Bandhan Bank Chief Economist and Head of Research Siddhartha Sanyal said the status quo on the repo rate in the MPC meeting was “almost a foregone conclusion”.
“Interestingly, despite lowering the consumer price index inflation forecast for the first quarter of the current fiscal by 50 basis points, the CPI projection for the full year was kept almost unchanged,” he said.
As expected, the “RBI underscored that the vigil on inflation will remain strong as the apex bank emphasised on the importance of reaching the CPI target of 4 per cent rather than merely staying within the tolerance band,” Sanyal viewed.
The Reserve Bank of India on Thursday left its key interest rate unchanged for a second straight policy meeting but signalled that it wants to see inflation moderate more while preserving the growth momentum.
The MPC meeting (June 6-8) took place against the backdrop of consumer price-based (CPI) inflation declining to an 18-month low of 4.7 per cent in April. The CPI for May is scheduled to be announced on June 12.
Shriram Finance Whole-time Director and CFO Parag Sharma said the healthy indicators have prompted the MPC to retain the policy repo rate at 6.5 per cent – a second successive recommendation for a pause in rate hikes.
However, it has still kept a tight leash on monetary conditions by continuing its strategy of withdrawal of accommodation, he said.
Since May 2022, RBI had hiked the short-term lending rate (repo) cumulatively by 250 basis points to check inflation, before hitting the pause button in April.
EEPC India Chairman Arun Kr Garodia said, “On expected lines, the Monetary Policy Committee of the RBI has kept the policy repo rate unchanged at 6.5 per cent for the second time running”.
“This is a welcome move considering that a stable repo rate would provide the necessary push to the economic growth, which is facing downside risks from global monetary policy tightening, stretched geopolitical tensions and volatility in commodity markets,” he added.
The next meeting of the rate-setting panel, the Monetary Policy Committee (MPC), is scheduled for August 8-10, 2023. PTI DC BDC BDC
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