New Delhi, April 8 The Reserve Bank's decision to maintain the status quo on interest rates is a measured approach to strengthen the macroeconomic environment, given the global headwinds influencing economic sentiment, experts said on Wednesday.
The Reserve Bank kept its key policy rate (repo) unchanged at 5.25 per cent, adopting a cautious wait-and-watch stance as policymakers assessed the fallout from the six-week Iran conflict on energy supplies, inflation, and growth.
Industry body Assocham said the RBI's decision is a measured step aimed at strengthening stability in the macroeconomic environment.
This decision underscores the central bank's careful assessment of prevailing macroeconomic conditions and its commitment to remain flexible in responding to evolving economic developments, said Saurabh Sanyal, Secretary General, Assocham.
Dipti Deshpande, Principal Economist, Crisil, said the RBI's move was in line with expectations. The uncertainties created by the West Asia conflict call for prudence, she said.
"It would be premature to draw firm conclusions on the impact or pre-empt the ultimate outcome of the West Asia conflict. At this juncture, all that is required is keeping ready adequate policy buffers and staying nimble to act as the situation evolves," Deshpande added.
Madan Sabnavis, Chief Economist, Bank of Baroda, said the policy was in line with expectations, with the status quo on rates and stance.
"Interestingly, GDP growth is projected at 6.9 per cent and inflation at 4.6 per cent. This virtually indicates few chances of any further rate cuts, as the RBI has also flagged El Nino as a risk to inflation," he said.
Mandar Pitale, Head, Financial Markets, SBM Bank (India), said the Monetary Policy Committee (MPC) has acknowledged the strong fundamentals before the conflict, including sustained growth, low inflation, and fiscal consolidation, which provide greater resilience against shocks, compared to many other economies.
However, the forward-looking stance and outlook are influenced by heightened uncertainty as a result of the conflict, he added.
Ranen Banerjee, Partner and Economic Advisory Leader at PwC India, said, given the uncertainties in West Asia, the MPC has acted prudently.
"The inflation projections have been raised, but they are still projected to be in the target range in all the quarters. Growth projections have been moderated, and these are likely to be updated with the emerging situation and spillovers from the conflict on energy and logistics costs and constraints," he said.
Rajani Sinha, Chief Economist, CareEdge Ratings, said that going forward, the central bank is to maintain the status quo on the policy interest rate.
"While there are upside risks to inflation, the impact of higher global crude oil prices on CPI inflation will be somewhat mitigated by sharing of the burden between the government, OMCs, and households. Given the lingering growth concerns, the RBI will not be in a hurry to reverse the rate cycle," she said.
Senthil Kumar R, MD and CEO of Nitstone Finserv, opined that the April policy underscores a steady and measured approach to balancing growth with inflation control, which is a positive signal for the overall lending ecosystem.
"A stable repo rate environment enhances predictability in borrowing costs and strengthens credit confidence across segments. In such a scenario, asset-backed lending solutions are well-positioned to play a critical role by offering timely and structured access to funds without adding undue financial stress on borrowers," he said.
Vinay Pai, MD and Head of Fixed Income, Equirus Group, said the RBI's focus is on growth and monitoring inflation. "Despite sufficient buffer stocks, the RBI has raised concerns on El Nino as one of the key inflation risks," he said.
Shishir Baijal, International Partner, Chairman & Managing Director, Knight Frank India, said, "In an environment where sentiment can be easily influenced by macroeconomic signals, the absence of rate volatility acts as a reassuring factor for the market. With financing costs remaining steady, prospective buyers are better positioned to evaluate and commit to long-term investments such as homeownership," he said.