Were lucky to have finally got a pause in interest rate cycle: Deepak Parekh after RBI keeps monetary policy unchanged
The Reserve Bank of Indias (RBI) monetary policy committee earlier this week unexpectedly kept the benchmark rate unchanged after hiking it by a cumulative 250 basis points in 11 months, however, it pledged to hike the interest rate again if needed.
Housing Development Finance Corporation’s (HDFC) Chairman Deepak Parekh on Saturday said, “We are lucky to have finally got a pause in the rising interest rate cycle.” The industry veteran’s comment comes days after the central bank put a break on key interest rates hike on Thursday, April 6.
Surprising everyone, the Reserve Bank of India’s (RBI) monetary policy committee earlier this week unexpectedly kept the benchmark rate unchanged after hiking it by a cumulative 250 basis points in 11 months, however, it pledged to hike the interest rate again if needed.
RBI Governor Shaktikanta Das in its statement while announcing the monetary policy committee’s verdict said that this decision to pause was ‘for this meeting only’. RBI's six-member MPC voted unanimously to keep the repurchase or repo rate unchanged at 6.50 per cent.
Most analysts had expected one final hike of 25 basis points in RBI's current tightening cycle before hitting a pause.
MPC also decided to retain a policy stance focused on "withdrawal of accommodation" to "ensure that inflation progressively aligns with the target, while supporting growth." That had been its approach since it started tightening in May 2022.
As global banking woes added uncertainty to the economic outlook, Parekh said “India is not immune to these global shocks, but has proved to be more resilient than many large economies.”
However, the HDFC chairman was also bullish on India’s growth story amid enough of tailwinds such as political stability, vaccine security, food security, a robust domestic consumption-based economy.
Moreover, Parekh also noted, “We have leap-frogged on digitalisation initiatives and the regulatory system for the financial sector is robust.”
“The other critical global issue for much of the western world has been the sudden change from years of quantitative casing and negative interest rates to a sharp rise in interest rates to combat inflation,” he said, adding that this resulted in a cost-of-living crisis across many advanced economies.
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