Any further growth in rate will act as a market dampener
Any further growth in rate will act as a market dampener, feel experts.
India sees 4% spike in high-net-worth individuals amid sharp global drop
Mumbai, Sep 29 Any further growth in rate will act as a market dampener, feel experts.
"Any further hike in interest rate compounded with commodity inflation will act as a market dampener. The postpone consumption will hurt the housing market which is currently on the upward growth curve," Niranjan Hiranandani, Vice Chairman - Naredco and MD- Hiranandani Group, said,
"The sharp dichotomy between growth - inflation sentiment is getting trickier globally. Reserve Bank of India is challenged to strike an equilibrium between spurring progressive GDP growth and docile inflation pressure out of tolerance limit. The persistent hike in the repo rates from past few subsequent quarters was along the line of market expectations amidst geo-political humdrum, he added.
Any further repo rate hike will lead to an enhanced inflationary situation with a counter -impact on the growth rate as well as consumption sentiment. Markets are now succumbing to the rising interest rate curve with the undesired ramifications on the currency trade, consumer spending, and investment cycle. It is now imperative to preempt fiscal intervention by the Government to stabilize the catastrophic inflation, he said.
Sakshi Gupta, Principal Economist, HDFC Bank, said, "The RBI raised the policy rate by 50bps to 5.9% as expected, aligning itself to aggressive monetary tightening globally. Moreover, the rate move was in response to continued domestic inflationary risks and growth that broadly continues to hold up. The central bank kept its inflation forecast unchanged at 6.7% in FY23 while lowering its GDP growth forecast by 20bps to 7% -- the latter in response to the lower-than-expected Q1 GDP numbers"
The RBI kept its stance unchanged at "withdrawal of accommodation" justifying it by the fact that liquidity remains in surplus, and the policy rate trails behind the inflation rate. The central bank drew a comparison with 2019 when the stance was last neutral, and liquidity was in a deficit mode while the policy rate was higher than inflation – indirectly alluding to real positive rates in the economy, he added.
