Expert views - RBI keeps repo rate on hold, cuts inflation projections

MUMBAI (Reuters) - The Reserve Bank of India (RBI) kept its key interest rate unchanged at 6.25 percent on Wednesday, as widely expected, while lowering projections for inflation and striking a somewhat less hawkish tone in a policy statement.

COMMENTS

RADHIKA RAO, GROUP ECONOMIST, DBS

"The tone suggests they are not yet convinced that the fall in inflation is enduring, given risks from farm loan waivers and seventh pay commission. In essence, the RBI remains concerned that a rate cut at this juncture might need to be reversed out next year if inflation returns to the upper end of the 2-6 percent range.

"Our takeaway is that the central bank is likely to maintain status quo for now. The room for a rate cut is contingent on below-target 2Q inflation, which will be available by August review, or shallow bounce in 3Q numbers."

(Reporting by Mumbai and Bengaluru newsroom)