RBI's decision to keep policy rate unchanged is disappointing: FICCI

Expressing disappointment with the RBI's decision to keep the policy rate unchanged, FICCI president Dr. Jyotsna Suri on Tuesday said there is a need to give policy stimuli to encourage demand and investments.

"The decision of Central Bank to keep the policy rate unchanged is disappointing for the industry. Given that the industrial growth still remains volatile and demand conditions have not seen much improvement, there is a need to give policy stimuli to encourage demand and investments," she said.

The FICCI president said she expected the central bank to reflect on the decision considering the scope of rising inflation.

"With a pickup in the monsoons, inflation is expected to remain range bound and within Reserve Bank of India's indicative trajectory. Additionally, the latest capital support provided by the Government to the Public Sector Banks should enable effective transmission into lower lending rates. Hence, we do hope that the Central Bank will consider an accommodative policy stance much ahead of the next scheduled bi-monthly monetary policy," added Dr. Suri.

The RBI today kept both repo rate and the Cash Reserve Ratio (CRR) unchanged in its third bi-monthly monetary policy review this year.

The RBI announced that the repo rate remains unchanged at 7.25 percent and Cash Reserve Ratio at four percent.

RBI Governor Raghuram Rajan said that the headline inflation is at elevated levels and banks are yet to pass on the full benefits of previous rate cuts.

Rajan said significant uncertainty on the factors influencing the monetary policy will be resolved in the coming months, including persistence of high inflation, monsoon as well as actions by the US Federal Reserve which is expected to shift to hiking rates.