Why RBI made a surprise pitstop in rate hike cycle
India TodayJust a few days after major central banks around the globe hiked interest rates to rein in rising inflation, the Reserve Bank of India sprang a surprise and decided to keep the key repo rate unchanged. All six members of RBI's Monetary Policy Committee voted to keep the repo rate unchanged at 6.50 per cent, breaking the cycle of six consecutive hikes since May 2022 and surprising analysts who had predicted another rate hike. REASON BEHIND RBI'S MOVE Explaining the reason behind the MPC's policy decision, Shaktikanta Das said even as the global economic outlook faces considerable headwinds and headline inflation remains above the targets of central banks, banking and non-banking financial service sectors in India remain healthy. "We remain positive on equity markets and expect interest rate sensitive sectors like real estate, auto, banks, financials along with engineering/capital goods to lead the rally in the near-to-medium term," Arora said, based on RBI's policy decision and commentary on economic growth and stability. Achala Jethmalani, Economist, RBL Bank said the RBI's policy decision appears to be a "hawkish pause" as the MPC turns data dependent and waits for prior rate hikes to play out into the deposit and lending rates.