MPC meet outcome shows RBI's resolve to support durable growth, say industry experts

Further, RBI lowers the growth estimates for 2022-23 which reflects the downside risks and evolving uncertainties, he said.Tushar Aggarwal, CEO and Founder, Stashfin, said given the ever-changing pandemic and international situation that impact the global supply squeeze and price pressure, the RBIs decision to ensure measures to keep inflation at less than 6 per cent, though cautionary, is a good move.The RBI has taken a rightful accommodative stance as this will allow our economy to grow, although at a slower rate than was expected.

The RBI's decision to keep key interest rates unchanged and continuation of its accommodative stance shows the central bank's resolve to support durable growth, according to industry experts.

The RBI on Friday kept the short-term lending rate (repo) unchanged at a record low of 4 per cent for the 11th time in a row in a bid to continue supporting economic growth despite inflation edging higher in the aftermath of Russia's war in Ukraine.

Rajiv Sabharwal, MD and CEO, Tata Capital, said the decision of the central bank to keep rate unchanged and continuation of accommodative stance shows its resolve to support durable growth.

''This comes at the backdrop of the prevailing geopolitical complexities, increased global disruptions and the crude oil shock. Further, RBI lowers the growth estimates for 2022-23 which reflects the downside risks and evolving uncertainties,'' he said.

Tushar Aggarwal, CEO and Founder, Stashfin, said given the ever-changing pandemic and international situation that impact the global supply squeeze and price pressure, the RBI's decision to ensure measures to keep inflation at less than 6 per cent, though cautionary, is a good move.

''The RBI has taken a rightful accommodative stance as this will allow our economy to grow, although at a slower rate than was expected. A GDP growth of 7.2 per cent seems sustainable in the long run given the initiatives being taken by the government,'' Aggarwal said.

Aarti Khanna, founder and CEO, Askcred.com opined that RBI's stance to keep the repo rate unchanged ever since the COVID disruptions will help maintain low interest rates in the market.

''India is still regaining momentum post wave 2 and Omicron, no change in repo rate would motivate consumers to continue to borrow,'' Khanna added.

V Swaminathan, CEO, Andromeda and Apnapaisa, said the ongoing global uncertainties topped with the Russia-Ukraine conflict are pushing the commodities higher due to supply constraints. As a result, the inflationary pressures are mounting.

As far as the loan sector is concerned, with no change in the repo rate, the loans are not getting any costlier for now, he noted.

The central bank has raised the inflation forecast to 5.7 per cent for the fiscal and lowered the economic growth forecast to 7.2 per cent for 2022-23 from the previous outlook of 7.8 per cent.

Rajiv Shastri, Director and CEO, NJ AMC, said the RBI decision reflects the reality that inflation is driven by the supply side, which monetary policy cannot address directly.

''Monetary tightening in this environment can cause a recession and we are happy that the RBI stood its ground despite widespread pressure to act,'' he said.

TRUST Mutual Fund CEO Sandeep Bagla said bank loans linked to repo rates may not get repriced upwards, but the cost of the funds will definitely go up.

Rajiv Agarwal, Operating Partner, Infrastructure - Essar and Managing Director, Essar Ports, said normalisation of LAF corridor to pre-pandemic levels of 50 bps and the tweaked liquidity management framework, introducing the Standing Deposit Facility at the lower end of the interest rate corridor, will enable financial stability and support economic activity.

RBL Bank's Chief Economist Rajni Thakur said the RBI has, to a large extent, re-aligned its policy to evolving market conditions and also signalled rate hikes over the year.

Given the current macro dynamics, MPC announcements were a tight rope walk that has delivered on re-calibrating growth-inflation projections, signalling impeding hikes and still buying time to hike lending rates, she said.

Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life Insurance, said even though the RBI has maintained the accommodative stance and kept the benchmark rates unchanged, the policy is likely to result in upward movement in yields.

The higher inflation projection and shifting of policy corridor to SDF would lead to higher bond yields, Reddy added.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)