MPC meeting: Continued pause on policy rate to push growth, says industry

Industry groups Ficci and Assocham have said that the Reserve Bank of India’s decision on Thursday to maintain a pause in its second consecutive bi-monthly Monetary Policy Committee (MPC) meeting is focused on taming inflation while supporting growth in the economy.

RBI kept the policy rate unchanged at 6.5 per cent in its last monetary policy committee meeting held in April.

“A status quo in policy rates was largely expected and, by keeping the repo rate unchanged and maintaining the stance of withdrawal of accommodation, RBI is keeping a watchful eye on inflation while supporting growth,” Subhrakant Panda, president, Ficci said.

“Ficci expects the impact of monetary policy interventions till date to pave the way for reversal of the rate hike cycle in due course,” he added.

The repo rate hike was paused for the second time after six consecutive increases aggregating to 250 basis points since May 2022.

The MPC voted 5 members to 1 to remain focused on the withdrawal of accommodation. 

Assocham secretary general Deepak Sood said, ''while the Monetary Policy Committee remains focused on the withdrawal of accommodation to further rein in inflation, we are confident that the RBI would ensure that adequate liquidity is maintained in the banking system and credit growth remains robust.”

“Price stability coupled with the push to growth are the twin catalysts for maintaining the momentum in the Indian economy,” he added.

Avishek Gupta, managing director and chief executive officer of Caspian Debt, said that stability of policy rates will be necessary to enable smoother and further recovery in the economy.

“As hinted by the RBI, while it is expected to be normal monsoon as per the Indian Meteorological Department (IMD), the spatial and temporal distribution of monsoon will need to be closely watched as that impacts agriculture and hence food prices going forward,” he added.