India Inc dissapointed with RBI decision to hike repo rate
New Delhi : Reserve Bank of India on Wednesday hiked repo rate for the second time by 25 bps in last three months, leaving India Inc disappointed.
The bank raised repo rate on the back of higher inflationary risks and fears of global volatility such as currency wars, resulting in hike on EMIs home, car and two-wheeler loans.
Addressing the media after the rate hike decision, RBI Governor Urjit Patel said the MPC noted the rise in retail inflation has continued for the third consecutive month.
The rate hike decision subdued the two key indices -- NSE Nifty50 and the S&P BSE Sensex -- and broke their week-long rally, with the wider Nifty50 settling at 11,346.20 points, lower by 10.30 or 0.09 per cent and the barometer closing the day's trade at 37,521.62 points, lower by 84.96 points or 0.23 per cent.
Commenting on the repo rate hike, Ficci President Rashesh Shah said: "Given the evolving inflation situation, the increase in the repo rate today by RBI was expected."
"By front-loading the interest rate hikes, the RBI is looking at minimising the adverse impact of rising inflation on the economy as well as providing support to the rupee."
Shah hoped the interest rate regime would stabilise following this increase.
"Moreover, it is very important for the Government and the RBI to work in tandem to rein in the inflationary pressures which are largely emanating from the supply side," Shah said.
Assocham President Sandeep Jajodia said: "We move towards a festive season, which should be helping the growth further and not remain subdued because of rising interest rates."
"The banks have already started raising rates. As the country moves into the general election mode, the balance between the inflation and growth should be evenly balanced and not tilted in favour of containing inflation at the cost of economic expansion".
(with IANS inputs)
