Industry welcomes Reserve Bank's move to keep key rates unchanged

New Delhi: Welcoming the RBI's move to keep the borrowing costs unchanged on Friday, India Inc said the central bank has maintained a fine balance to support growth as well as keep inflation within the target range amid geopolitical worries.

The Reserve Bank of India (RBI) kept borrowing costs unchanged at a record low for the 11th time in a row in a bid to continue supporting economic growth despite inflation edging higher in the aftermath of Russia's war in Ukraine.

Sanjiv Mehta, President, FICCI said, "The statement does allude to a withdrawal of accommodation clearly signaling towards normalization of liquidity management to ensure inflation remains within target.

"There has been a considerable change in the economic scenario since the last policy announcement and we were expecting that the Central Bank will take due cognizance of the current situation".

Assocham said the Monetary Policy Committee has struck a fine balance with a nuanced approach to encourage growth while calibrating inflationary pressures and defend the Indian economy by navigating the current geo-political storm with resolute response.

"The accommodative stance by the RBI is in line with the PHD Chamber's expectations to strengthen and support the business and consumer sentiments as well as the economic recovery," said Pradeep Multani, President, PHD Chamber of Commerce and Industry.

In line with market expectations RBI Monetary policy Committee, kept the repo rate unchanged at 4 per cent and continued with accommodative stance. Given the current Geopolitical situation the increasing inflation projections and reducing growth outlook was also expected.

"To impart flexibility in liquidity management, Reserve Bank of India has tweaked its liquidity framework, introducing standing deposit facility through which it will absorb surplus liquidity. As the economy is limping back to normalcy RBI restores, LAF corridor to 50 bps as in pre-covid level with SDF as floor at 3.75 per cent and MSF as ceiling at 4.25 per cent which will also provide financial stability. Increasing SLR holding in Held-to-Maturity category by 100 bps till March 31, 2023 banks will be able to better manage their investment portfolio," Atul Kumar Goel, MD & CEO of PNB said.