The Reserve Bank’s status quo on the financial policy supplies more leg-room for another rate cut in the coming months depending upon macro-economic information to improve development amidst tariff headwinds, specialists stated on Wednesday.
The Reserve Bank of India (RBI) kept its repo rate the same on Wednesday, as policymakers weighed the dangers presented by United States President Donald Trump’s trade policies and the unpredictabilities surrounding the capacity for greater tariffs.
The six-member rate-setting panel, headed by RBI Governor Sanjay Malhotra, held the repurchase rate at 5.5 percent in a consentaneous vote and chose to continue with a ‘neutral’ position.
Discussing the financial policy, Binod Kumar MD and CEO of Indian Bank, stated that as RBI had front packed rate cut, it was anticipated to keep status quo.
“It is a welcome move. However, it leaves room to reconsider in coming months as CPI is benign and a push for growth may be required,” Kumar stated, including that the Indian Bank has actually currently handed down advantages of previous rate cut and anticipate additional normalisation in MCLR as expense of fund continue southward journey.
Madan Sabnavis, Chief Economist at Bank of Baroda, stated the credit policy was basically on anticipated lines with a status quo on rates and an extension of the position being neutral. While underlying the strength of the economy which is to grow by 6.5 percent, the policy has actually flagged the unpredictability on the trade front.
“…it does look like that this status quo can be persevered with for some more time unless there is any dramatic change in the conditions outlined in the policy. There can hence be at most one more rate cut which will be data dependent,” Sabnavis stated.
Amidst unpredictabilities over international trade front, Governor Malhotra stated the reserve bank is taking all essential actions to support financial development.
The time out on repo rate follows a 100 basis point cut in rate of interest over 3 bi-monthly MPC satisfies in 2025.
Ranen Banerjee, Partner and Economic Advisory Leader at PwC India, too stated the MPC has actually appropriately pressed the time out button on the policy rates, provided there is no instant requirement to fire another rate cut bullet.
“The growth forecast has been retained at 6.5 per cent, which may come under some mild pressure but may not be very off, with a 10-20 bps downside risk. Any downsides on the external front are likely to be cushioned from the domestic demand uplift possibilities,” Banerjee stated.
Ajay Kumar Srivastava, MD & & CEO, Indian Overseas Bank, stated RBI’s choice to boost retail access to Treasury Bills through SIPs and the standardisation of bank locker and account claim settlements, are efforts that are anticipated to additional deepen monetary addition and increase financier self-confidence.
“At Indian Overseas Bank, we see this policy stance as growth and stability oriented, and we are committed to supporting the credit needs of individuals and businesses alike,” Srivastava stated.
Seema Prem, co-founder & & CEO of FIA Global, stated the effect of the 100 bps rate cut because February on the economy has actually been broad-based and is still unfolding, the banks are passing it on in regards to lower financing rates, consisting of for debtors under the PM Mudra Yojana.
“The Governor’s emphasis on building on bank account openings under PM Jan Dhan Yojana to develop resilience afforded by insurance and pensions augurs well,” she stated.
Anantharam Varayur, Co-Founder of Manasum Senior Living, suggested that while a rate cut might have offered extra stimulus, the unchanged GDP development projection of 6.5 percent for FY26 recommends a steady financial outlook.
“For the senior living housing sector, this stability in interest rates could be beneficial in the long run, as it may keep borrowing costs manageable for potential homebuyers,” Varayur stated.
Ashok Kapur, Chairman of Krishna Group and Krisumi Corporation, stated while a rate cut would have more sped up the need for homes throughout sections, obtaining expenses continue to stay at reasonably accommodative levels, supported by the cumulative 100 bps decrease previously this year.
“With the festive season approaching, stable interest rates and the continued transmission of past rate cuts are expected to keep housing demand buoyant – particularly in the mid and premium segments,” Kapur stated.
Rajkumar Singal, CEO of Quest Investment Advisors, stated the RBI’s choice plainly shows the regulated method towards managing inflation while supporting financial development in the nation.
“Keeping interest rates steady when inflation is very much under control is a very good decision and will help in boosting positive sentiments in the economy while encouraging long-term investments in the economy,” Singal included.
Parijat Agrawal, Head of Fixed Income at Union Asset Management Company, believed that offered the continuous trade and tariff-related interruptions, the MPC remains in a time out mode and searching for rate transmission to happen.
“In our assessment, given the growth inflation dynamics, the rate environment is expected to remain benign with further rate reductions ahead. Hence, investors are advised to remain invested in light of the prevailing benign environment,” Agrawal stated.
Manappuram Finance Managing director V P Nandakumar stated the RBI has actually chosen to stop briefly policy rates and keep a neutral position, generally since it needs more clearness on upcoming inflation information and the last United States tariff structure, as these are presently producing higher unpredictability.
“Therefore, the central bank believes that further easing is not necessary at the moment, as liquidity in the banking system is already in surplus, and the CRR cut announced earlier will further improve liquidity conditions,” Nandakumar stated.
