The Reserve Bank of India (RBI) on Tuesday kept key interest rates unchanged in the fifth bi-monthly monetary policy review. The RBI status quo was widely anticipated by the market participants.

Repo and reverse rates stood at 6.75% and 5.75% respectively. At the same time, cash reserve ratio (CRR) and statutory liquidity ratio (SLR) retained at 4% and 21.5% respectively.

Myiris has collated reactions of experts post RBI policy. The same are follows:

Nirakar Pradhan, chief investment officer, Future Generali Life Insurance:

''The RBI's accommodative stance still remains while keeping an eye on the slight uptick in core CPI inflation and focusing on transmission of earlier rate cuts by lenders. In spite of expected 7th Pay Commission hike, inflation is targeted to be at 5% by March 2017 while growth outlook is positive with a GDP growth estimate of 7.4% in FY2016. Markets would also be watching out for RBI's methodology for determining base rate which could have implications on profitability of lenders and borrowers going ahead.''

Mihir Vora, director and chief investment officer, Max Life Insurance:

''Inflation projections for next year have been increased a notch by 0.2% because of uncertainty on the food and energy prices. The Governor is not too concerned about the impact of the 7th Pay Commission recommendations on the fiscal deficit and inflation since these may already have been factored in by the Government.''

Shishir Baijal, chairman & managing director Knight Frank India:

''In line with our anticipation, the RBI has kept the rates steady. In real estate we do not see any dampening of spirits as a total of 125 bps cut in the rates is already done across the year and now much depends on how banks transmit the benefit to home buyers. Further, regardless of this cumulative cut, banks on their own should be able to transmit more benefit to the end consumers as the cost of funds is becoming cheaper with improved liquidity conditions. Factors like a relook at the pricing strategy by the developers and abiding by project completion timelines and the overall economic growth also stand crucial.''

Jay Shankar, chief India economist & director, Religare Capital Markets:

''The language in the policy statement remains accommodative, but slightly more cautious on inflation than last policy. We believe that the RBI views Pay Commission implementation to be the biggest risk to fiscal deficit and hence inflation via increase in wages and rents, and thus may like to wait for GoI's guidance on the same in the Union Budget in Feb 2016, before cutting rates any further. The fiscal deficit target for FY17 is 3.5% of GDP, as per the consolidation road-map. Inflation target for March 2017 is 5%. We would expect the RBI to maintain status quo on repo rate in its next policy meet on Feb. 2, 2016.''

Jimeet Modi, CEO, SAMCO Securities:

''Overall, the RBI Policy was in line with expectations. There were no expectations of any action in the policy rates and the RBI has acted in line. One positive commentary was the urgency to link the final base rate to the marginal cost of funds. Effective implementation of the same shall result in faster transmission of rate cuts to the end borrowers. The markets and the RBI will keep a close watch on the FOMC and that shall be a key determinant of future policy action. Indian markets will largely track global market movements until January-end when the expectations shall getting build for the Budget. We expect the markets to consolidate in a narrow sideways range due to the lack of any meaningful triggers in December.''

Amit Saxena, CEO and Whole time Director, Karvy Financial Services:
 
'With CPI increasing to a 4-month high, US Fed rate decision expected to create a knee-jerk reaction in the Indian markets, and the impact of the pay commission report,  eyes are set on  the fiscal consolidation measures the Government would announce in the next budget.'

Kunal Shah, fund manager, Debt at Kotak Mahindra Old Mutual Life Insurance:

'Today's policy further re-iterates stance of accommodative monetary policy and the guidance is less hawkish than what market was expecting. Government bond yields should find some support at around 7.75% levels. Overall market will keenly watch monetary policy in US & EU to take further cues. If government sticks to fiscal deficit target, it will open up room for one more 25bps cut, and bond yields will then move towards 7.50%. On the other hand, any slippage on fiscal target can derail the rate easing momentum and keep bond yields elevated in line with inflation outcome.'

Gautam Sinha Roy, vice president & fund manager, Motila Oswal Asset Management Company:
 
'RBI seems to have adopted a cautious outlook on food inflation and non-food, non-fuel CPI expressing some concerns on rabi output due to unseasonal rains and shortening of winter due to El Nino weather conditions. However, it has categorically stated that we are in the midst of early stages of a recovery with order book and capacity utilization levels indicating a pick-up in manufacturing activity. Non-petroleum exports are beginning to show early signs of turn around. Clean-up of balance sheet by banks is also expected to be completed by March 2017.'

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