Madan Sabnavis, Chief Economist, Bank of Baroda
“The policy was more or less on expected lines with the repo rate being hiked by 25 bps. The surprise elements were however three fold. First, the stance remained unchanged with withdrawal of liquidity persisting. There were expectations of the same changing to neutral. The second is the forecast on inflation, which has been kept at 5.3% for the next year with the path being upward moving across the next four quarters. This is probably the reason for the RBI increasing the rate. Third, is the forecast for GDP which has been kept at 6.4% through there is a downward path across the 4 quarters.
The major takeaway is that there will be a prolonged pause for sure before any further action is taken by the RBI and will be data driven. Presently it looks like that there is an upside risk to the inflation number and hence a rate hike could be thought of later. A rate cut during the year looks more unlikely and can be on the cards only when there is a change in stance first.”
Mr Anirban Majumder, CFO, Home Credit India
“Today’s upward revision of key interest rate by 25bps by RBI, reflects the central bank’s continued resolve to keep inflationary pressure within the comfort range in new fiscal, while supporting economic growth. With the global economy expected to see a slow growth in FY23, RBI’s move is in line with keeping a tight grip on macroeconomic stability and domestic economy resilient. Hopefully with the sixth rate hike being a moderate one, we should see the end to rate hike cycle soon.”
Mr. Arun Kumar, VP and Head of Research, FundsIndia
“Today’s rate hikes were in line with market expectations. We may be close to peak policy rates driven by fall in domestic inflation in recent months. The current repo rate at 6.50% is comfortably above RBI’s inflation expectation of 5.3% in FY24. There are early signs of US inflation easing and slowing pace of rate hikes by the US FED. Overall, we expect RBI to go for a long pause in rate hikes from hereon. Future policy actions will be guided by the evolving domestic inflation / growth dynamics and the US Fed rate hike trajectory.”