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Experts welcome RBI decision to keep rates unchanged

Last Updated: Friday, December 16, 2011 - 18:04

New Delhi: The Reserve Bank's move to pause its hawkish monetary policy stance is on expected lines as high interest rates affect the economic growth, bankers and analysts said.
Welcoming the policy stance, ICICI Bank chief Chanda Kochhar said the policy is a realistic assessment of the prevailing macroeconomic situation.
"This is a positive step as growth has been moderating and inflation, though still above comfort levels, has started showing signs of easing.
"The policy statement has addressed concerns on the interest rate side, by clearly indicating a likely reversal in the cycle with monetary policy actions being directed towards addressing growth related issues going forward," she said.
Bank of India Chairman Alok K Misra said, "By keeping rates unchanged and not talking any liquidity enhancing measures, RBI has signalled it remains single-mindedly focused on inflation."
He further said that today's pause will help anchor inflationary expectations. Given the overall macroeconomic environment, it should serve the economy well if RBI begins its easing process, he added.
"RBI's action is on expected lines. While a sharp decline in second quarter economic growth was pointing for a rate cut, sustained high level of core inflation is a strong argument against rate cut," Fitch Ratings Director Devendra Kumar Pant said.
Another ratings major ICRA said the RBI kept the policy rate and the CRR unchanged in its mid-quarter policy review as inflationary pressures are yet to diminish particularly in the case of non-food manufactured products.

 "...the guidance provided today was distinctly less hawkish, highlighting the increasing concerns regarding the moderation in economic growth," Naresh Takkar, MD and CEO of ICRA Ltd said.
"Strong rate-tightening steps taken by the RBI in the last few quarters have badly impacted the investment & consumption cycle.
Immediately after the RBI policy review announcement, stock market showed showed mixed response. the BSE benchmark index Sensex pared its initial gains and ended at 15,491.35, down 345.12 points.
Commenting on RBI's move and its impact on the stock market, APE Securities Senior Director, Research, Kislay Kanth said, "The decision by RBI to leave everything unchanged is moderately negative on the overall market sentiments, because much was anticipated from this meeting.
Only the recent intervention in the currency markets is a moderate positive and we believe that the RBI should be little more proactive than what we saw over the last few months".


First Published: Friday, December 16, 2011 - 18:04
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