The monetary policy committee (MPC) kept the Reserve Bank of India’s policy rates unchanged, and shifted to Neutral position from Accommodative, in order to keep the pendulum move equally on either side (ie.,either an increase or decrease) which resulted in the bonds markets being upset with the pause policy of RBI.

CRISIL opines that the current rate cut cycle would thus come to an end which is operative since January 2015.  FICCI added that if there was a cut it would have resulted in a more demand which has come down due to demonetization.  Thus the repo rate was kept unchanged at 6.25%.  With this the experts felt that

  • Banks should step up now to increase their lending to various sectors, more so that of SMEs, Corporate and other entities.
  • It is also felt that this would keep the inflation and growth would now be balanced with a neutral rate policy resulting in a long term stability.

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