Status quo on policy rates on expected lines: Experts

KOLKATA: The decision of the Reserve Bank of India to keep the policy rates unchanged in October is on expected lines, according to experts.

At the meeting of the six-member Monetary Policy Committee (MPC) which concluded on Friday, it has been decided to keep the benchmark interest rates unchanged at 6.5 per cent.

Tribhuwan Adhikari MD and CEO of LIC Housing Finance said "RBI's decision to maintain the repo rate unchanged in today's MPC meeting is on expected lines. The move demonstrates RBI's continued commitment to support growth and maintain economic stability. The steady interest rate regime will help us in keeping our offerings competitive and affordable." Chief economist of Bandhan Bank Siddhartha Sanyal said "The status quo on policy rates in October is no surprise and expected. The move was supported by all the six members of the MPC." He said that after a sharp spike in the first half of the last quarter, prices of agro-commodities softened later and gave the central bank (RBI) some breathing space at this juncture.

According to Sanyal, softening of prices of agro-commodities will likely lead to sub-six per cent inflation in the coming months.

This coupled with uneven recovery in various sectors of the economy will likely prompt the MPC to maintain status quo on policy rates in the coming months, Sanyal said.

Anitha Rangan, economist with Equirus Capital, said "Despite global uncertainties which warrant close monitoring, RBI chose to keep the policy rates unchanged at 6.5 per cent. RBI highlighted high inflation as a major risk to macro stability." The high inflation risk is emanating from volatile food and energy prices both domestically and globally, driven by geo-political factors and climate changes, Rangan said.

Founder and director of Credit Wise Capital Aalesh Avlani said "amidst global uncertainties, the RBI's decision to keep the policy rates unchanged aligns with our expectations. This decision brings a welcome dose of optimism as we step into the festive quarter, serving as a significant means for increased consumer spending".