RBI MPC decision to keep key rates unchanged on expected lines: Experts

“We continue to expect prolonged pause by the MPC, with liquidity tools being more closely linked if necessary to manage the policy stance,” said Bhardwaj.

Whereas Pralay Mondal, managing director and chief executive officer (MD and CEO), CSB Bank said that the central bank’s move to create a fintech repository and increasing limits of unified payments interface (UPI) for specific categories will fuel growth.

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“Reversal of marginal standing facility (MSF) and standing deposit facility (SDF) on holidays shows regulator’s intent to manage and keep liquidity efficient for the bank,” said Mondal.

Abheek Barua, Chief Economist and Executive Vice President, HDFC Bank, said: "the RBI seemed less hawkish on liquidity management compared to the previous policy which could be seen as a signal of a move towards neutrality. This implies that while the RBI is likely to act against a significant surplus, it might also not favour a large deficit going forward."

MPC decision

RBI on December 8 left its key interest rate unchanged for the fifth consecutive meeting, citing a potential resurgence in inflation and signalling that price stability remained its primary objective.

The Reserve Bank of India's monetary policy committee (MPC), as expected, kept the repo rate, at which banks borrow short-term funds from the central bank, at 6.5 percent, as prices remain higher than the central bank’s medium-term target of 4 percent.

The MPC has kept the repo rate unchanged at 6.5 percent in the past four monetary policy reviews, after raising the rate by 250 basis points since May 2022.