RBI keeps repo rate unchanged; here's how economists and industry experts view the move

The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 6.5 per cent reflecting its cautious approach amid ongoing economic uncertainties. This is the ninth consecutive time the central bank has opted for stability in its monetary policy. The decision to keep the repo rate steady comes amidst persistent concerns about inflation, which remains above the RBI's target range. The central bank's commitment to bringing inflation down to its 4 per cent target continues to face challenges due to ongoing food inflation and other economic factors.

Here's how experts view the RBI policy decision

Anitha Rangan, Economist, Equirus

"RBI continues to bat for patience as domestic inflation is slowly but steadily trending towards the four per cent target. In addition, global volatility, and geo-politics add to the challenges that keep RBI on watch. RBI cannot afford the slightest error of judgement – perhaps the action of BoJ has put RBI under a bigger guard. Another spanner around deposit challenges from banks also means RBI is not in the mood to cut rates in the near term. Stay patient, stay put, and policy rates to remain steady for longer."

Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Shares and Stock Brokers

 "A key point to note is his emphasis on food inflation and the fact that MPC was willing to look through it in case it will transitory but as recent experience has suggested, food prices have remained elevated for too long and given a 46 per cent weight in the CPI basket, this component cannot and should not be ignored. High food inflation with its tendency to spill over to core inflation and unanchor inflation expectations as has happened post-Nov '23 remains the primary concern keeping RBI unhinged. All this in the backdrop of robust economic growth momentum with Indian PMI's remaining one of the highest amongst major global economies suggests MPC is not too worried about rates restricting growth. This can further be observed as the central bank kept its forecasts for rates unchanged at 7.2 per cent for FY25."

Dharmendra Raichura, VP and Head of Finance at Ashar Group

"The stable interest rate environment fosters long-term investments in housing. As a real estate developer, we appreciate the significance of a steady repo rate, which influences borrowing costs and impacts the property market. The consistent repo rate provides a favorable environment for sustainable development and growth in the real estate sector."

Atul Parakh, CEO of Bigul

"RBI's stance suggests a continued focus on price stability over immediate rate cuts, given the recent history of rate hikes and the current economic climate."

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