Expressing disappointment at the RBI's decision to keep interest rates unchanged, industry body Ficci on Thursday said there is a need for continued action on the policy rate front to boost growth.
Meanwhile, Assocham said accommodative stance on policy is understandable as long as banks are nudged to pass on the rate cut benefits to customers.
RBI has given an adequate approach to the accommodative stance of monetary policy in the era where lot of developmental activities are on the move and thrust of the government is to create demand in the economy, PHD Chamber said.
The Reserve Bank on Thursday unexpectedly hit the pause button on cutting interest rates as it gave more importance to prevailing inflation pressure and rising food prices over a worrying slowdown in the economy.
After five consecutive rate cuts this year, the six-member Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, unanimously voted to hold the key repo rate at 5.15 per cent and reverse repo rate at 4.90 per cent.
"The RBI has left the repo rate unchanged in today's announcement. This is contrary to what FICCI was expecting given the weakening growth scenario in the economy. We note with concern that the transmission of the earlier policy rate cuts has not happened adequately, and are disappointed with the decision to not cut the repo rate as there is need for continued action on the policy rate front," Ficci President Sandip Somany said in a statement.
He said a reversal in the declining economic growth trajectory is clearly the need of the hour and all steps should be taken to bring about this change.
"A cut in the policy rate was also important for boosting the sentiment in the market and amongst investors, and FICCI was hoping for a bolder action on this front. In fact, we feel that a further cut of 75 to 100 basis points in the repo rate is required in a short period of time to strengthen growth in the economy," he added.
Assocham President B K Goenka said, "A temporary pause by the RBI to the policy interest rate reduction cycle while keeping its stance accommodative is understandable as long as it keeps nudging the banks to significantly pass the benefits of earlier rate combined repo rate cuts of 135 basis points since February this year."
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