Economists and industry leaders have welcomed the Reserve Bank of India’s (RBI) decision to maintain the policy repo rate unchanged, emphasizing its role in safeguarding financial stability and ensuring long-term growth prospects. Dr. Ranjeet Mehta from PHDCCI noted that the decision reflects a balanced perspective on the economy’s risks, creating a favorable environment for sustained growth. Despite global uncertainties, the RBI’s move is seen as supportive of medium to long-term growth.
Experts have cautioned about potential challenges such as supply shocks, elevated energy prices, and the impact of a possibly below-normal monsoon on growth prospects. Madan Sabnavis, Chief Economist at Bank of Baroda, predicted potential rate hikes later in the year if inflation trends towards 5.9 percent. He highlighted the RBI’s proactive measures to bolster forex reserves through various channels like FPI, ECB, and FCNR (B) deposits.
The market has responded positively to the RBI’s actions, with a focus on potential shifts in FPI flows within the debt segment. Binod Kumar, MD and CEO of Indian Bank, praised the efforts to stabilize the rupee amidst geopolitical challenges, underscoring the Indian economy’s resilience. The decision to maintain rates is seen as a strategic move to prioritize growth and boost confidence in the economy’s fundamentals.
Tribhuwan Adhikari, MD and CEO of LIC Housing Finance, expressed optimism that the stable rate environment would bolster housing demand. The continuity of current rate levels is expected to enhance borrower confidence, facilitate credit availability, and sustain housing demand across different markets.
