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In an unexpected move, RBI has kept the repo rate unchanged in its Monetary Policy Committee (MPC). It hit the pause button after a cumulative rise of 250 bps since May 2022.
The repo rate thus continues to be at 6.50%.
“While the policy rate has been increased by a cumulative 250 basis points since May 2022, which is still working through the system, there can be no room for letting down the guard on price stability. Taking these factors into account, the MPC decided to keep the policy repo rate unchanged at 6.50% in this meeting, with readiness to act, should the situation so warrant”, said RBI in a press release.
Sharing her views, Namrata Mittal, Senior Economist, SBI MF said, “Today’s policy was a close call between no action or a final 25 bps hike in this rate hiking cycle on the back of global turbulence last month. Against this backdrop, the RBI chose to stay on hold. While the vigilance on inflation continues, contained commodity cost could keep inflation anchored around 5% defying the need for any further hike in this cycle.”
Citing the rate hike pause as not entirely unexpected, Nilesh Shah, MD, Kotak MF added that the central bank will watch developments and data before taking the next call.
“Markets are likely to remain positively biased with bond yields likely to remain range bound, after having already come down by 25-30 bps from the recent highs. Long term rates are likely to have peaked in the current cycle and the duration funds are expected to start showing improved performance in coming months,” said Mahendra Jajoo, CIO, Fixed Income, Mirae Asset MF
