New Delhi, Oct 7 (IANS) Reserve Bank of India’s (RBI) policy rate hike after 44 months and the Reserve Bank of India’s shift to a calibrated tightening stance was expected amid global tensions but further tightening must be data-led, an industry chamber said on Wednesday.
The statement from PHDCCI cited experts to keep monetary tightening data‑dependent while safeguarding credit flows to productive sectors.
“The policy rate hike after 44 months is in line with industry expectations, given the global scenario and the decision of rate hikes in major central banks across the World. The Governor’s strong stance of no rate cuts in the near future but chances of pause or rate hikes add to the cautious approach being taken by the RBI,” said Rajeev Juneja, President, PHDCCI.
“The shift to calibrated tightening with global energy prices, geopolitical developments and domestic food-price pressures are creating uncertainty around the inflation trajectory,” said Dr. Ranjeet Mehta, CEO&SG, PHDCCI.
Mehta said that the priority now should be to ensure that “monetary tightening remains data-dependent while maintaining adequate credit flows to productive sectors.”
Faster improvement in supply-side capacity, logistics, food management and energy security will be critical to complement monetary policy in containing inflation, he added.
Growth of the country remains resilient, driven mainly by private consumption, strong investment activity, resilient exports, sound system level parameters of Scheduled Commercial Banks and Non-Banking Financial Companies, backed by the momentum in high frequency indicators including IIP and Manufacturing and Services PMI, the statement noted.
The RBI Monetary Policy Committee (MPC) decided to increase policy repo rate 25 bps, taking repo rate to 5.5 per cent on the backdrop of sudden re-escalation of global uncertainties, volatility in global crude prices and financial markets, despite resilient but declining global growth, the statement noted.
The Standing Deposit Facility (SDF) stands at 5.25 per cent and the Marginal Standing Facility (MSF) and Bank Rate stands at 5.75 per cent with a change in the stance from neutral to calibrated tightening.
—IANS
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