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Expert Views: RBI keeps rates on hold, as expected

Reuters 

(Reuters) - India's central kept interest rates unchanged at a policy meeting on Wednesday to offer support for an that has lost some momentum, in a decision that was widely expected as has eased significantly. The committee (MPC) kept the repo rate unchanged at 6.50 percent as predicted by 64 of 70 analysts in a poll. The central also retained its 'calibrated tightening' stance as expected.

All six members of the voted to keep the rates on hold.

COMMENTARY

SHASHANK MENDIRATTA, ECONOMIST, ANZ BANK, BANGALORE

"We might see the central change its stance to 'neutral' from 'calibrated tightening' in February.

"The RBI will definitely keep rates on hold for another 2-3 quarters, with the expectation that will remain below 4 percent over the next 3-4 quarters, provided remain at current levels. RBI's policy seems to be for a long pause at the moment. The issue they are focusing now is the sticky core

"Liquidity in the system has been almost persistently in deficit over the past few weeks. I think the RBI will step up purchases, and there needs to be some more liquidity injection by the RBI to support growth."

DHANANJAY SINHA, HEAD OF INSTITUTIONAL RESEARCH, EMKAY GLOBAL FINANCIAL SERVICES LTD, MUMBAI

"When the headline numbers are being brought down, they (RBI) are looking for a scenario where the could actually remain high. Effectively, I think they will remain on hold for next three-four months before things get clearer.

"I think currency depreciation is definitely a worry, apart from volatility in crude prices. These are the factors that can actually change RBI's projection in terms of inflation."

AURODEEP NANDI, ECONOMIST, (INDIA),

"We believe that the RBI is likely to change stance to 'neutral' in early 2019. We perceive that is slowly entering into a low inflation, slowing growth quadrant. We could possibly see growth slowing down from here to even clocking below 7 pct by Q4 FY 19, with remaining capped on the back of low food inflation, and reducing core momentum."

"Our base case remains of a prolonged pause on repo rate."

(Reporting by Bengaluru newsroom; Editing by Sunil Nair)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Wed, December 05 2018. 15:07 IST
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