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Expert Views: RBI keeps repo rate on hold, stance as 'neutral'

The Reserve Bank of India on Wednesday kept its key repo rate at 6 percent for a third straight policy meeting, and also retained its "neutral' stance, seeking to support economic growth even as inflation has accelerated to a 17-month high.

All but two of 60 economists in a Reuters poll predicted the repo rate would be kept on hold at its lowest level since November 2010.

Hitesh Jain, Associate VP, Research at IIFL Investment Managers said: 

"(The) tone was construed to be relatively hawkish, but the markets were actually expecting this given the trend in inflation."

"There is upside risk (to inflation) given that the budget has announced a hike in minimum support prices for most food commodities ... Given that we are above 5 percent, if we go to around 6 percent, there is a chance that RBI may go for a rate hike in the first half of the next fiscal year."

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