Feb 10 Reuters The Reserve Bank of India39;s key lending rate was held steady at record lows on Thursday, but it surprised markets by leaving its key deposit rate unchanged against some economists39; predictions of a hike to realign it with shortterm money market rates.

The monetary policy committee held the lending rate, or the repo rate, at 4. The reverse repo rate, or the key borrowing rate, was also kept unchanged at 3.35. 

The MPC voted unanimously to maintain the status quo on the repo rate and by a majority of 51 to retain the accommodative policy stance.

Respondents in a Feb. 24 Reuters poll were closely split on the timing of the repo rate rise, with slightly more than half, 17 of 32, expecting a 25basis point increase to 4.25 in April.

COMMENTARY

RADHIKA RAO, ECONOMIST, DBS BANK, SINGAPORE

The policy communique was predominantly dovish, with the central bank opting to keep rates unchanged, effectively seeing through firm inflation in the March 2022 quarter, and expecting a pullback towards the midpoint of the target range in FY23.

The absence of broadbased recovery further strengthened their resolve to maintain status quo. The central bank expects the economy to weather global volatility and spillover risks, courtesy the healthy reserves coverage ratios, narrow current account deficit and steady foreign investment flows, suggesting that domestic policy has the room to lag the hawkish pivot amongst the Western central banks.

AURODEEP NANDI, ECONOMIST…