RBI Monetary Policy: Who Said What After The Announcement

The MPC has kept the benchmark interest rate unchanged at 4 per cent and decided to continue with its accommodative stance despite rising inflation

This is the 11th time in a row that the MPC, headed by RBI Governor Shaktikanta Das, has maintained the status quo. Image: Getty

New Delhi: The RBI's bi-monthly Monetary Policy Committee (MPC) has kept the benchmark interest rate unchanged at 4 per cent and decided to continue with its accommodative stance despite rising inflation.

This is the 11th time in a row that the MPC, headed by RBI Governor Shaktikanta Das, has maintained the status quo.  

The central bank had last revised its policy repo rate or the short-term lending rate on May 22, 2020, in an off-policy cycle to perk up demand by cutting the interest rate to a historic low. Here are some of the reactions from the industry. 

Rajiv Agarwal, operating partner, infrastructure – Essar, managing director, Essar Ports

The RBI policy was largely on expected lines with key policy rates kept unchanged and maintaining an ‘accommodative’ stance despite the rising inflation. Recognising the concerns around inflation due to elevated crude oil prices, RBI has taken the necessary precautions and remains mindful of anchoring these expectations. Normalisation of Liquidity Adjustment Facility (LAF) corridor to pre-pandemic levels of 50bps and the tweaked liquidity management framework, introducing the Standing Deposit Facility at the lower end of the interest rate corridor will enable financial stability and support economic activity.

Sanjay Palve, senior managing director, Essar Capital

The RBI and government have done a splendid job in steering us past the effects of the pandemic and enabling a quick recovery of the Indian economy. As we look to move past the pandemic, we find ourselves amidst escalating geopolitical tensions and various sanctions which are adversely affecting the entire global economy. The RBI has decided to maintain an accommodative stance and has kept the benchmark interest rates unchanged despite rising inflation, which seems to be a right call for now to boost growth of the economy. Inflation levels which again rose sharply in February due to elevated prices of crude oil are a cause of concern and the RBI decision to tweak its liquidity framework by introducing the standing deposit facility through which it will absorb surplus liquidity, is a step in the right direction.

Shishir Baijal, chairman and managing director, Knight Frank India

Since the pandemic, the RBI has continued to maintain an accommodative stance prioritising a sustained economic growth recovery. Currently, India’s key growth indicators are at a nascent stage of recovery and there is still a slack in the economy. The escalating inflation in the economy arising from global commodity price rise and its transmission to the consumer prices would further add downward pressure to domestic growth trajectory. Thus, amidst the inflationary pressure and growth uncertainty, in our view the RBI is likely to keep the key policy rate unchanged in its April 2022 review. We reckon that the real estate industry has seen a remarkable improvement mainly on account of low interest rates and hence hope that any policy change action is nuanced and gradual allowing prospective buyers to recalibrate their property purchase decisions without much disruption.

Anarcok Group

Despite inflation edging higher in the aftermath of the Russia-Ukraine war and surging oil prices, the RBI has again decided to keep the repo rates unchanged at 4 per cent and reverse repo rate at 3.35 per cent. This is the eleventh consecutive time that the RBI maintained status quo amid the current uncertainties and the global economy also seeing a sharp rise in inflation. The real estate industry had been gearing up for an increase in the repo rates, and the fact that this has not happened is obviously positive for home loan borrowers. Developers' input costs have been inflating steeply and a hike in property prices is not more or less inevitable. Moreover, the acquisition cost in Maharashtra has gone up by 1 per cent on account of the metro cess applicable from this month. To this sombre backdrop, increased home loan lending rates would have been a considerable setback.

Homebuyers have a continued opportunity to avail of decadal low home loan interest rates. The overall cost of living has increased significantly since the Ukraine debacle began playing out, and the RBI has taken a proactive and necessary step to maintain relative housing affordability in the country.