Bankers today said the Reserve Bank's move to maintain status quo in its policy was "fairly balanced and pragmatic" keeping in view inflationary risks. The RBI today kept its repo rate -- at which it lends to banks -- at 6 per cent. It was last in August 2017 that the central bank had cut the repo rate by 0.25 per cent from 6.25 per cent to 6 per cent. SBI Chairman Rajnish Kumar said the RBI's decision to maintain status quo was in consonance with market expectations. "The policy assessment is fairly balanced and pragmatic with inflation and growth both expected to show an uptick in next two quarters," Kumar said in a statement. ICICI Bank MD and CEO Chanda Kochhar said it was a display of prudence keeping in view risks to the inflation trajectory. "The RBI has taken cognisance of further improvement on growth prospects by government through structural reforms including recapitalisation of banks," she said. "It is heartening to note that RBI has also communicated greater clarity on the liquidity framework indicating that it is ready to deploy both short term and durable tools to absorb or inject liquidity as the need arises," Kochhar added. The tone of the policy is noticeably cautious on prices and positive on growth, Dena Bank Chairman and Managing Director Ashwani Kumar said. "It is also to be noted that the future policy actions will largely depend on data facts.
Overall, the outlook of MPC is supportive to the growth of the economy," Kumar said. Rating agency ICRA's Managing Director and Group CEO Naresh Takkar, noting the tone of the policy not "particularly hawkish", said the expected uptick in CPI inflation spells a low likelihood of rate cuts in the immediate term. "We expect an extended pause for the policy rate as a baseline scenario going into 2018," Takkar said. With growth bouncing back to 6.3 per cent for September from 5.7 per cent in June quarter, RBI's inflation targeting stance seems to have been validated as of now, Bank of Maharashtra MD and CEO R P Marathe said. "RBI has held on to its growth forecast for the year at 6.7 per cent. We expect the RBI to maintain a neutral stance over the next few quarters even as global central banks raise rates," said Sameer Narang, Chief Economist, Bank of Baroda. Muthoot Finance MD George Alexander Muthoot said RBI's decision to maintain status quo was well within the industry expectations given the current economic conditions. "This approach is more of tightening the systemic liquidity until the inflation rate normalises," he said.
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