Status quo likely for next 6 months: Economists

Chennai: With the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) deciding to retain the Repo rate at 6.5 per cent, economists are of the view that a rate cut may not happen any time soon or at least for next six months, said senior economists.

In a 5:1 decision, the MPC which met on February 6-8, decided to hold the Repo rate -- the rate at which the RBI lends to banks -- at 6.5 per cent. The RBI MPC also decided not to change its stance to ‘neutral’ from ‘withdrawal of accommodation’. “It was no surprise that RBI MPC decided to keep the status quo on the interest rates for the sixth consecutive time.

However, RBI continued to sound Hawkish as against the market expectations and has not provided any indication of the timing of the change in monetary stance from withdrawal of accommodation,” said Suman Chowdhury, chief economist and head (research), Acuité Ratings & Research. “Given the tone of the MPC statement and the expectation of growth buoyancy, we believe that the likelihood of any rate cut by RBI has significantly reduced over the next six months,” Chowdhury added.