The increase in repo rate could have been avoided as the industry is already reeling under pressures of high cost of capital and low availability in a tight liquidity situation. Industry would have liked a reduction in headline rates.
High interest rate has been identified as a major barrier to boosting growth. The increase in repo rate has come as a surprise to us. While industry is disappointed, reduction in interest rates and availability of credit remain a plea and we are confident the RBI will keep this in its sight.
Naina Lal Kidwai
Contrary to expectations, the Reserve Bank has chosen to further tighten the monetary stance, giving a clear signal that fighting inflation is its core priority. RBI governor Raghuram Rajan has acted in a cautious manner. The financial markets were, perhaps, expecting too much from him.