RBI keeps repo rate unchanged: What the experts have to say

The Reserve Bank of India held its policy rate at 7.25 per cent on Tuesday, pausing as widely expected after a spike in food prices sent consumer inflation to an eight-month high.

All but four of 51 analysts polled by Reuters had predicted the RBI would keep the repo rate on hold.

COMMENTARY-

ABHEEK BARUA, CHIEF ECONOMIST, HDFC BANK, NEW DELHI

"The policy is a little more dovish than anticipated in the sense, they are looking for space to come up with an accommodative policy. There are clear risks on the horizon especially coming from the monsoon".

"If things look a little better with food prices and so on, both in terms of how the monsoon pans out, and the supply management ... then the possibility of a rate cut over the next couple of months, even outside the policy, is very much there".

"Unlike the last policy, where they sounded very hawkish and the market construed it as the end of the cutting cycle, this was clear affirmation they are not at the end and they would look for an opportunity to give growth a boost."

R. SIVAKUMAR, HEAD OF FIXED INCOME, AXIS ASSET MANAGEMENT, MUMBAI

"The rates have been kept on hold as expected. The RBI has marked down the inflation expectations and therefore it is good news. It means the RBI is recognising that some of the risk that they saw in June are mitigating".

"In the near-term, we expect the RBI to remain on hold due to U.S. Federal Reserve's decision. From markets' perspective any delay in rate cuts till the end of 2015 will not be a concern."

A. PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP, MUMBAI

"The policy is along expected lines. They have softened their language on inflation. And if inflation undershoots from their trajectory, then some space for monetary easing could open up later in the year."