(Reuters) -The Reserve Bank of India (RBI) kept its key interest rate unchanged on Wednesday, as widely expected, but tweaked its policy stance to “neutral”, opening the door for rate cuts amid early signs of a growth slowdown in the economy.
The Monetary Policy Committee (MPC), which consists of three RBI and three external members, kept the repo rate unchanged at 6.50% for a tenth straight policy meeting.
The committee, however, changed its policy stance to “neutral” from “withdrawal of accommodation”.
COMMENTARY
DEVENDRA KUMAR PANT, CHIEF ECONOMIST, INDIA RATINGS AND RESEARCH, GURUGRAM
“While the status quo on rates was on expected lines, the change in stance was contrary to our expectations.”
“The RBI governor in his speech has mentioned the risk on inflation can emanate from adverse weather events and rise in commodity prices due to global political situations.”
“(Future) rate action is more likely to be data driven.”
UPASNA BHARDWAJ, CHIEF ECONOMIST KOTAK MAHINDRA BANK, MUMBAI
“The Reserve Bank of India’s decision to hold rates while changing the stance to neutral is completely in line with our expectations.”
“The tone of the (RBI) governor remains fairly balanced keeping further decisions data dependent.”
“We continue to expect the onset of rate-easing from December with a 25 bps cut, but the scale of easing in this cycle is expected to be shallow with limited scope for back-to-back easing in each policy.”
(Reporting by Dimpal Gulwani and Yagnoseni Das; Compiled by Dhanya Skariachan; Editing by Abinaya Vijayaraghavan)
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