The Reserve Bank of India (RBI) surprised markets by holding its key repo rate steady on Thursday after six consecutive hikes, saying it was closely monitoring the impact of recent global financial turbulence on the economy.
The central bank said its policy stance remains focused on "withdrawal of accommodation", signalling it could consider further rate hikes if necessary, but a number of economists now expect the central bank to remain on hold.
"We expect the RBI to maintain an extended pause and evaluate the lagged impact of previous rate hikes and global uncertainties on growth-inflation dynamics," said Upasna Bhardwaj, chief economist at Kotak Mahindra Bank. "With unyielding core inflation, we remain firm and resolute in our pursuit of price stability which is the best guarantee for sustainable growth," said the committee in its statement.
Five of the six committee voted in favour of continuing with the stance of "withdrawal of accommodation", while one member dissented.
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