‘RBI policy shows steady follow up action to Budget announcements’

New Delhi: Reserve Bank’s monetary framework shows steady follow up action to the Budget announcements, reinforces market confidence and provides boost to the manufacturing sector, opined experts on Friday.

The Reserve Bank of India kept its benchmark interest rate unchanged on Friday, as expected, as inflation remained at manageable levels and growth concerns eased following increased government spending in the Budget and reduced tariff pressures after a trade deal with the United States.

It’s six-member Monetary Policy Committee (MPC) voted unanimously to keep the repurchase or repo rate at 5.25 per cent. RBI retained its neutral policy stance, signalling that it is likely to remain on hold for now.

Commenting on the policy, industry body Assocham President Nirmal Kumar Minda said that with inflation remaining within the tolerance band and growth momentum continuing, the RBI’s neutral stance provides much-needed policy certainty for businesses and investors.

“Assocham believes that this prudent monetary framework will reinforce market confidence, boost manufacturing and trade activities, and enhance India’s global competitiveness,” Minda said.

Madan Sabnavis, Chief Economist, Bank of Baroda, said the policy has left repo rate unchanged as expected and hence the markets have been quite unaffected.

“In line with the push given by the Budget to MSMEs, the RBI has increased the limit for collateral-free loans to Rs 20 lakh. Hence there seems to be steady follow-up action to the Budget announcements,” Sabnavis said.

Pradeep Aggarwal, Founder and Chairman, Signature Global (India) said the RBI’s decision to hold the repo rate steady at 5.25 per cent offers stability for interest-rate–sensitive sectors like real estate in the current macroeconomic environment.

“With inflation remaining at manageable levels and the benefits of earlier rate cuts continuing to flow through to homebuyers in the form of improved affordability, residential demand has remained resilient,” Aggarwal said.

Capri Global MD Rajesh Sharma said that equally important are the RBI’s proposed regulatory measures focused on strengthening customer protection, improving digital payments security, and easing the cost of doing business across the financial sector.

The move to advancing financial inclusion boosting MSME credit and the proposed relaxation in branch expansion norms are positive steps that enhance operational efficiency without compromising systemic stability, Sharma said.