RBI policy: Banking sector lauds 'mature' approach

Last Updated: Thu, Jun 07, 2018 11:35 hrs
Reserve Bank of India (PTI image)

Mumbai: Following a hike in repo rate and reverse repo rate by the Reserve Bank of India (RBI), key players from the banking sector lauded the policy changes announced by its Monetary Policy Committee (MPC).

Yes Bank CEO Rana Kapoor opined that the policy statement reinforces the MPC's alacrity to retain inflation within its 4 percent target.

"RBI's unanimously delivered 25bps hike has been balanced with a neutral stance, reinforcing MPC's alacrity to retain inflation within its four percent target amidst hitherto build-up in price pressures led by crude prices. This stance allows RBI the choice to act in accordance with evolving macro and financial conditions, in both global and domestic economy in the coming months. Amidst many moving parts, this will entail a careful balancing of global headwinds from elevated crude prices, geopolitical tensions, and domestic policies of MSPs, state pay commissions on growth-inflation dynamics," he said.

Meanwhile, Piramal Finance managing director Khushru Jijina hailed the policy decision as a "mature and calibrated approach."

"This indicates RBI will remain vigilant on retail price levels in the coming months. RBI's evaluation and the outlook for India's economic growth are encouraging and looks positive for the economy. Consistently improving manufacturing data, recovery in private capacity utilisation and IBC resolutions indicate an imminent revival in private investment activity," he said.

Moreover, HDFC Bank's chief economist Abheek Barua opined that global commodity prices would warrant monetary action in the future as well.

"Sensible and cautious response to the risks have unfolded since the last meeting. This is not likely to be the end of the hike cycle as domestic price risks such as MSP hikes and firm global commodity prices would warrant further monetary action," he said.

Earlier in the day, RBI announced a hike in the repo rate and reverse repo rate to 6.25 percent and 6 percent respectively.

Maintaining a neutral stance, the central bank's six-member MPC reiterated its commitment to achieving the medium-term target for headline inflation of 4 percent on a durable basis.

Furthermore, the Committee said GDP growth is projected in the range of 7.5-7.6 percent in H1 and 7.3-7.4 percent in H2, with risks evenly balanced.

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