MUMBAI: The Reserve Bank of India kept interest rates and its cash reserve ratio unchanged on Thursday, as was widely expected.
RBI kept Repo Rate, the short-term lending rate unchanged at 6.25 per cent while Reverse Repo Rate, the short-term borrowing rate, also kept unchanged at 5.25 per cent.
RBI also kept Cash Reserve Ratio, the level of deposits that commercial banks must keep with the central bank, unchanged at 6.0 per cent.
COMMENTARY: SEAN CALLOW, SENIOR CURRENCY STRATEGIST, WESTPAC INSTITUTIONAL BANK, SYDNEY:
"Since the RBI so clearly flagged a pause at its November meeting, the data haven't warranted changing their stance. The ongoing decline in y/y wholesale price inflation allows the pause to extend for the time being. But India's activity data have been very resilient and with global inflation pressures not helpful (e.g. >2 year highs on crude oil prices), the RBI is indeed likely to be pausing in its tightening cycle, not ending it.
"Hitting the inflation target is by no means certain. We look for repo rate hikes to resume in Q2 2011, en route to a 7.0 per cent benchmark rate by end-2011."
SANDIP SABHARWAL, CEO OF PORTFOLIO MANAGEMENT SERVICES AT BROKERAGE PRABHUDAS LILLADHER IN MUMBAI
"The policy was largely in-line with expectations. But, the statements clearly portray a hawkish stance and RBI is definitely not comfortable with inflation."
"We could see RBI hiking rates in January." MARKET REACTION: - At 12:06 p.m. (0636 GMT), the most traded 8.08 per cent, 2022 bond yield eased 2 basis points to 8.04 per cent.
- The benchmark 10-year bond, the 7.80 per cent, 2020 was down 4 basis points at 8.04 per cent.
- BSE main stock index <.BSESN> extended gains to 0.4 per cent from 0.1 per cent earlier
