Reserve Bank of India has kept key lending rates unchanged in the first-quarter monetary policy review, according to market expectation. RBI retained repo and reverse repo rate to 8% and 7% respectively. Cash reserve ratio has been retained at 4%.
Commenting on the RBI policy, Yogesh Agarwal, MD and CEO of Ballarpur Industries said, ''We welcome the RBI's move to keep the repo rate and the CRR on hold though a slash in the repo rate by atleast 25 bps would have brought in some positive momentum to the economy and added to the current market cheer.''
''While the RBI seems to be veering towards targeting consumer price inflation as its dominant guidepost, I believe this may result in a prolonged period of high rates this calendar without any real dampening of inflationary pressures. That's because core consumer price inflation does not respond well to monetary measures. In such a situation, growth and investments could be casualties in an already fragile environment,'' he said.
''Going forward, much depends on non economic factors such as the elections which will be the main trigger come May. Risk of an El-Nino exerting upward pressure on food prices can't also be ruled out. Inflation, both CPI and WPI have come off their highs but if it stays the course even at these levels, then rates will not come down before the latter half of the current calendar year, if at all,'' Agarwal added.
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