Rate hike shows RBI committed to bring inflation to 4%:Bankers

Bankers today said the Reserve Bank of India's decision to hike repo rate by 25 basis points shows the apex bank's commitment to bring retail inflation to 4 per cent.

Lenders believe that the neutral stance adopted by the RBI shows it's willingness to be accommodative with uncertainty over global growth.

"The decision to keep the stance in neutral mode indicates RBI's willingness to be flexible and accommodative with global growth continuing to be uncertain," said Rajnish Kumar, chairman, State Bank of India.

After increasing the repo rate by 25 bps in its June policy review, the RBI today again hiked the key policy rate by 25 basis points to 6.5 per cent.

Its decision to raise repo rate by 25 bps for the second time in succession is a clear desire to frontload the rate hike cycle, said Kumar.

Standard Chartered Bank chief executive officer (India) Zarin Daruwala said, "The 25 basis points hike reaffirms RBI's commitment to bringing CPI inflation to 4 per cent on a durable basis. The bond market sentiment was boosted by a balanced policy guidance and retention of the 'neutral' stance."
Yes Bank's managing director and chief executive officer, Rana Kapoor, said, "With peak of CPI inflation now behind us, and monetary transmission playing out gradually hereon, I expect a pause in the remainder of FY19."