The Reserve Bank of India kept its policy rate unchanged at a near seven-year low of 6 percent on Wednesday despite a sharp slowdown in economic growth, after consumer inflation surged to a five-month high.COMMENTS
VARUN KHANDELWAL, MANAGING DIRECTOR, BULLERO CAPITAL, DELHI
"Chances of a rate cut in the next few months are extremely low. Without getting into value judgments on the sensibility of the MPC`s actions, it is quite clear from their refusal to cut rates despite a dramatic fall in inflation that they really do not want to cut. The impending tightening of monetary policy globally, easing in fiscal discipline, rise in commodity prices are all factors which will reinforce its hawkish stance further."
"There isn`t much scope for increase in tensions between the government and the RBI. The finance ministry has already had consultations with MPC members and I am certain an exchange of views on ease/don`t ease has transpired. Short of firing the MPC and taking over the RBI, there isn`t really much that the government can do further about interest rates."TUSHAR ARORA, SENIOR ECONOMIST, HDFC BANK
"No surprises as such. Going strictly by the optics of headline inflation is unlikely to result in rate cuts. Room to maneuver will only come if the MPC chooses to utilize the /-2 percent bandwidth and indeed looks through a marginal rise in inflation above the 4 percent level. I believe this could happen later during the year as growth numbers continue to surprise on the downside."ANITA GANDHI, DIRECTOR, ARIHANT CAPITAL MARKETS, MUMBAI
"In its last policy review in August, the RBI had reduced the repo rate, citing reduction in inflation risks. However, retail inflation rose to a five-month high of 3.36 per cent in August due to costlier vegetables and fruits. Considering that the economy needs immediate measures for revival of growth, at least 2 to 3 rate cuts of 25 bps can be expected going ahead."
"I do not expect increased tensions between the RBI and the government over policy. Ideally speaking RBI is required to act as an independent entity in the best interest of the nation."SAMRAT DASGUPTA, CEO, ESQUIRE CAPITAL, MUMBAI
"I think inflation is inching up a little and with the U.S. also tightening liquidity, the probability for a rate cut, is very low. A maximum of 25 bps is possible, if U.S. says they won`t crunch liquidity anymore."
"I think government and the central bank is in sync. They know its difficult to cut rate beyond this without harming the rupee."
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