Not belying the expectations of senior economists, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) retained the repo charge at 6.50 per cent. The repo charge is the speed at which the RBI lends to the business banks.
Announcing the choice of the MPC after its three-day deliberations, RBI Governor Shaktikanta Das stated on Thursday that the committee determined to maintain the repo charge at 6.5 per cent.
The MPC additionally determined to not change its stance from ‘withdrawal of accomodation’.
The MPC met on February 6-8.
BSE Sensex tanked more than 600 points after RBI announcement of credit policy with banks main the autumn.
Sensex was buying and selling at 71,523.08 points down by a large 628.92 points or 0.87 per cent.
Axis Bank, ICICI Bank, Nestle are down more than 2 per cent. The non-public banks index is down more than 1.5 per cent. Au Bank is down 2 per cent, Kotak Mahindra Bank is down 2 per cent.
FMCG shares are down with the index falling 1.2 per cent. Tata Consumer is down 2 per cent, Britannia is down 2 per cent, Jyothy Labs is down 3 per cent.
Suman Chowdhury, Chief Economist and Head – Research, Acuité Ratings & Research stated it was no shock that RBI MPC determined to maintain the established order on the rates of interest for the sixth consecutive time. However, RBI continued to sound hawkish as in opposition to the market expectations and has not offered any indication of the timing of the change in financial stance from “withdrawal of lodging”.
Chowdhury stated given the tone of the MPC assertion and the expectation of progress buoyancy, we imagine that the chance of any charge minimize by RBI has considerably diminished over the following six months.
“In our opinion, the brief time period charges will proceed to stay excessive within the close to time period. We additionally anticipate financial institution deposit charges to point out a rise by 25-50 bps, given the persevering with hole between credit and deposit progress,” stated Chowdhury.
Vinod Nair, Head of Research at Geojit Financial Services, stated the home market exhibited cautious range-bound motion on Wednesday, regardless of sturdy PMI information and beneficial international cues forward of the RBI policy meet.
While no change in stance is anticipated, RBI’s commentary on any hints concerning potential charge cuts and enhancements in liquidity might be carefully monitored.
(With inputs from IANS)