The Reserve Bank of India refused to bite the bullet and kept the key lending rate at a seven-year low of 6 percent on Wednesday. Risk of rising inflation can be considered as one of the major factors that forced the RBI to keep policy rates unchanged in the fifth bi-monthly monetary policy review.
This could mean that the interest rates might not be coming down in a hurry and EMI payers may not have anything to cheer about.
While keeping repo rate at 6 per cent on Wednesday, the RBI raised inflation forecast to 4.3-4.7 per cent in third and fourth quarters of the ongoing financial year. However, it kept economic growth forecast unchanged at 6.7 per cent.
Here's what market experts have to say about the RBI's status quo:
Amar Ambani, Partner & Head of Research, IIFL Wealth Management
Rising inflationary pressure, concerns of fiscal slippage and ongoing policy normalization by global central banks has straitjacketed RBI in terms of rate cut. Higher government spending and risk of deviation on the fiscal roadmap also pose inflationary risks. Effectively, the monetary stance remains unchanged and thus space for further easing is clearly ruled out. We see no policy move during next two quarters.
His views also appeared in this article on Moneycontrol.
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The Economic Times