RBI's decision on interest rate to support growth, check inflation: Industry

economictimes.indiatimes.com:

Reserve Bank of India (RBI) left its key policy rates unchanged for a third straight meeting but signalled tighter policy if food prices drive inflation higher. The monetary policy committee (MPC), which has three members from the central bank and a similar number of external members, held the benchmark repurchase rate (repo) at 6.50 per cent in a unanimous decision.

Commenting on RBI's decision, Ficci president Subhrakant Panda said the central bank has adopted a balanced approach by maintaining status quo on policy rates which will support growth while targeting inflation which has inched up recently. «The outlook remains clouded due to possible El Nino conditions, and tough global outlook calls for careful monitoring even as the policy stance remains withdrawal of accommodation while allowing previous interventions to flow through the system,» he said.

Assocham secretary general Deepak Sood opined anchoring of inflation may have led to measures like incremental cash reserve ratio, but as the RBI Governor Shaktikanta Das has given an assurance it is a temporary intervention that would be reviewed on September 8. «Besides, there is an assurance of enough liquidity in the system that should give us comfort,» he added.

The RBI Monetary Policy Committee (MPC) unanimously left the repo rate unchanged at 6.50 per cent, but reduced the money supply by raising the cash reserve ratio (CRR) to 10 per cent on the incremental NDTL (net demand and time liabilities) over the last three month, for a limited period till September 8. Sanjay Palve, senior managing director, Essar Capital said the RBI's decision aligns with expectations in this dynamic economic environment.