MPC’s decision to keep repo rate unchanged is on expected lines
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Mumbai, Apr 08: The RBI MPC’s decision to keep the policy repo rate unchanged at 5.25 per cent while maintaining a neutral stance is largely on expected lines, feel industry experts.
VP Nandakumar, Chairman and Managing Director, Manappuram Finance, says, “The RBI MPC’s decision to keep the policy repo rate unchanged at 5.25 per cent while maintaining a neutral stance is largely on expected lines and reflects a cautious, data-dependent approach amid heightened global uncertainties, particularly ongoing tensions in West Asia.”
While domestic macroeconomic fundamentals remain resilient, the MPC has rightly highlighted emerging upside risks to inflation, driven by potential increases in crude oil and other commodity prices, along with possible supply-side disruptions. Although headline inflation remains within the target range at present, the evolving global environment warrants continued vigilance, he said.
The policy stance provides stability while allowing flexibility to respond to changing growth-inflation dynamics. Additionally, the RBI’s continued focus on streamlining regulatory frameworks and improving ease of doing business is expected to support credit flow, enhance operational efficiency for financial institutions, and strengthen the broader financial ecosystem, he added.
Measures aimed at facilitating MSME financing and broadening participation in financial markets are also likely to improve liquidity conditions and support sustained credit growth.
Ajay Kumar Srivastava, Managing Director & CEO, Indian Overseas Bank says, “The RBI’s decision to keep the repo rate unchanged at 5.25 per cent reflects a balanced and ‘safety-first’ approach, prioritising macroeconomic stability. While the Indian economy continues to demonstrate strong growth at 7.6 per cent, a cautious stance is warranted amid evolving global uncertainties, particularly geopolitical tensions in West Asia and volatility in crude oil prices.”
By maintaining the rates steady, the RBI is reinforcing the sustainability of the ongoing recovery while ensuring predictability in borrowing costs which is a welcome relief for both households as well as businesses, he said.
We also respect the RBI’s continued focus on improving ease of doing business, especially for MSMEs. The removal of due diligence requirements for onboarding onto the TReDS platform is a progressive step that will significantly enhance liquidity access and working capital efficiency for small businesses. Further, measures aimed at simplifying banks’ capital management frameworks and broadening participation in the term money market will deepen financial markets, enhance systemic efficiency, and strengthen overall financial stability, he added.
