Industry associations welcome RBI decision to pause interest rates

After six consecutive hikes aggregating 250 bps, RBI hits a pause

Industry groups CII, FICCI, and ASSOCHAM have welcomed the Reserve Bank of India’s decision on Thursday to pause the hike in the benchmark policy rate.

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

“We strongly welcome the RBI’s move to decouple from the global tightening cycle and pause interest rate hike, which is in line with what CII had been advocating for long now,” said Sanjiv Bajaj, president of Confederation of Indian Industry (CII).

“We agree with the Central Bank’s observation that the lagged impact of the past rate hikes should be allowed to percolate into the system, and not stifle demand by further rate hikes,” he said.

RBI Governor Shaktikanta Das said in a statement the Monetary Policy Committee (MPC) decided unanimously to keep the policy repo rate unchanged at 6.50 per cent, with readiness to act should the situation warrant.

“The pause in policy repo rate by RBI is a welcome move given the evolving macro-economic and financial markets scenario. The renewed phase of turbulence that central banks are grappling with globally given developments in the banking sector, geopolitics and slowdown in growth & trade flows warranted a prudent response which RBI has delivered,” said Subhrakant Panda, president of Federation of Indian Chambers of Commerce & Industry (FICCI).

Avishek Gupta, managing director and chief executive officer of Caspian Debt, said that the RBI’s decision is expected to help small and medium enterprises.

“It also makes it easier for financial institutions to be able to deliver credit where it is needed without concerns of surprising the borrower with a rate hike or concerns of dealing with an unexpected squeeze in their margins in the future,” he said.

Deepak Sood, secretary General at ASSOCHAM, said the central bank’s policy statement made a correct reading of the global economy and its possible impact on India.