The Reserve Bank of India (RBI) on Friday decided to keep the repo rate unchanged at 5.25 per cent for the third time in a row, a move that has drawn varied reactions from industry experts. The central bank's neutral stance reflects a balanced approach to supporting economic growth while remaining vigilant about emerging inflationary pressures.
Expert Opinions on RBI's Decision
Srinivasan Vaidyanathan, Operating Partner, Essar Capital
According to Vaidyanathan, the RBI's decision is a balanced response to a challenging macro environment. The central bank's caution on inflation, amid elevated crude prices and a weaker rupee, signals that future actions will depend on energy prices and currency dynamics. For capital-intensive businesses, rate stability preserves predictability for long-term investments.
Jitendra Tanwar, Managing Director & CEO, Namdev Finvest Limited
Tanwar noted that the RBI's decision reflects a prudent approach, balancing growth support with inflation vigilance. The revised CPI inflation forecast for FY27 at 5.1 per cent and GDP growth projection at 6.6 per cent highlight challenges from geopolitical tensions, crude oil prices, supply chain disruptions, and weather uncertainties. Despite headwinds, domestic demand remains resilient, especially in Tier 2, Tier 3, and rural markets.
Indranil Pan, Chief Economist, YES BANK
Pan observed that the policy focused more on addressing foreign flows and external sector problems than growth-inflation dynamics. Measures to boost FPI investments include tax incentives and allowing banks to raise FCNR (B) deposits with RBI bearing hedging costs. These could generate USD 35-45 billion in inflows, potentially closing the balance of payments gap for FY27. The policy pause buys time to assess growth-inflation dynamics without immediately reacting with a rate hike.
The RBI's decision underscores a cautious approach as it navigates a complex economic landscape, balancing the need for growth with rising inflation risks.
