Holding policy interest rates does not surprise Indian market

“The decision to keep the policy rate unchanged is in line with market expectations," said Chanda Kochhar, MD and CEO, ICICI Bank. "The articulation of a continued accommodative policy stance is welcome. As stated in its April policy, the RBI has ensured adequate liquidity and brought the liquidity balance closer to neutrality, which is indeed commendable. The favourable monsoons and the momentum in policy reforms like the Goods & Services Tax augur well for the economy going forward,”  she added.

V S Parthasarathy, Group Chief Financial Officer, Mahindra Group, recalled Rajan’s statement made during  his first Policy back in September 2013, and quoted Rajan as saying, "Let us remember that the postponement of tapering is only that, a postponement. We must use this time to create a bullet proof national balance sheet and growth agenda, which creates confidence in citizens and investors alike."

"Taking off from there," V S Parthasarathy said, "his policies were seldom music to the ears (though he delivered a 150 bps cut against a 75 bps increase), but if we are to interpret the notes in his swan song, he is leaving on a  high note having delivered on what he promised – a very strong foreign exchange reserve position, a steady Rupee, a national focus on keeping ‘relevant’ Inflation (CPI) in a band between 2% - 6%, and the country’s liquidity position improving from ‘deficit’ to ‘surplus’. As a result, he has prepared the stage for the new incumbent to play a symphony."

Rana Kapoor, MD & CEO, YES Bank said, "“In the coming months, the disinflationary impact will be upheld by a favorable monsoon and structural policy reforms instituted by the government. Hence, notwithstanding the current pause, this will engender 50-100 bps space for incremental monetary easing before end of FY17.”

The fourth bi-monthly monetary policy statement will be announced on October 4, 2016.