The Reserve Bank of India’s choice to keep the repo rate steady at 5.25% has been praised by economists and bankers for its positive impact on the ongoing economic recovery. This decision is seen as a move to ensure sustainable growth, support credit expansion, and maintain stable borrowing costs. Ajay Kumar Srivastava, from Indian Overseas Bank, commended the RBI’s focus on macroeconomic stability and ease of doing business, particularly for MSMEs.
Vinod Francis, SGM & Chief Financial Officer at South Indian Bank, highlighted that the decision considers the increasing risks to inflation and provides much-needed stability to the financial system. The steady rate environment, coupled with sufficient liquidity, is expected to bolster credit growth in retail and MSME sectors, as well as enhance asset-liability management for financial institutions. Srinivasan Vaidyanathan, from Essar Capital, noted that the RBI’s decision aligns with expectations and underscores the central bank’s commitment to balancing growth and inflation control.
The unchanged rate regime has been viewed positively by Tribhuwan Adhikari, MD & CEO of LIC Housing Finance, as it maintains affordability for homebuyers, especially in the affordable and mid-income categories. Dipti Deshpande, Principal Economist at Crisil Ltd, mentioned that the fiscal capacity to absorb higher energy costs resulting from conflicts has helped mitigate their impact on retail inflation. Prashant Vasisht, Senior Vice President at ICRA Limited, anticipates that while crude and product flows may take time to normalize post-ceasefire, some relief can be expected in supplies of crude oil and petroleum products like naphtha and LPG.
