RBI’s calibrated decision aimed at strengthening economic environment: Experts
The Central Bank kept the policy rate (repo) unchanged at 5.25 percent and adopted a cautious wait-and-watch stance as policymakers assess the effects of the six-week-old conflict in Iran on energy supply, inflation and growth.
Industry body Assocham said the RBI’s decision is a calibrated step aimed at strengthening stability in the macroeconomic environment
Assocham Secretary General Saurabh Sanyal said this decision underlines the central bank’s careful assessment of current macroeconomic conditions and its determination to remain flexible in responding to evolving economic developments.
Crisil Chief Economist Dipti Deshpande said the RBI’s move was in the expected direction. He said a number of uncertainties arising from the conflict in West Asia necessitated caution.
“It would be premature to draw firm conclusions about the impact of the West Asian conflict or to predict its ultimate outcome. All that is required at this juncture is to keep adequate policy buffers in place and remain agile to take action as the situation evolves,” Deshpande added.
Madan Sabnavis, Chief Economist, Bank of Baroda, said the policy is in line with the current situation on interest rate and stance as expected. “Interestingly, GDP growth is estimated to be 6.9 per cent and inflation to be 4.6 per cent. This suggests that the chances of further rate cuts are very low as the RBI has flagged El Niño as a risk for inflation as well,” he said.
Mandar Pitale, Head of Financial Markets, SBM Bank (India), said the Monetary Policy Committee (MPC) recognized strong pre-conflict fundamentals such as sustainable growth, low inflation and fiscal consolidation, which provided greater resilience to shocks than many other economies.
However, he added that the forward stance and outlook are affected by increased uncertainty as a result of the conflict.
Ranen Banerjee, Partner and Economic Advisory Leader at PwC India, said MPC is being cautious given the uncertainties in West Asia.
“Inflation forecasts have been upgraded but are still projected to be within the target range in all quarters. Growth forecasts have been softened and are likely to be updated based on situations and spillovers arising from the conflict over energy and logistics costs and restrictions,” he said.
CareEdge Ratings Chief Economist Rajani Sinha said the central bank will maintain the status quo on the policy rate going forward.
“While there are upside risks to inflation, the impact of higher global crude oil prices on CPI inflation will be mitigated somewhat by sharing the burden between the government, OMCs and households. Given the ongoing growth concerns, the RBI will not be in a rush to reverse the interest rate cycle,” he said.
Nitstone Finserv CEO and MD Senthil Kumar said the April policy underlines a steady and measured approach to balancing growth with inflation control, which is a positive signal for the overall lending ecosystem.
“A stable repo rate environment increases predictability in borrowing costs and strengthens credit confidence across segments. In such a scenario, asset-based lending solutions are well positioned to play a critical role by offering timely and structured access to funds without creating undue financial stress on borrowers,” he said.
Vinay Pai, Head of Fixed Income at Equirus Group, said the RBI’s focus is on monitoring growth and inflation. “Despite adequate buffer stocks, the RBI has expressed concerns that EL Niño is one of the key inflation risks,” he said.
Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said that in an environment where sentiment can be easily influenced by macroeconomic signals, the absence of rate volatility acts as a reassuring factor for the market.
“With financing costs remaining stable, potential buyers will be in a better position to consider and commit to long-term investments such as homeownership,” he said.
