Confederation of Indian Industry (CII) President Ajay S Shriram on Tuesday said the decision of the RBI to maintain a status quo in policy on interest rates reflects a cautious approach, while tackling the growth-inflation conundrum.
According to the CII, a modest 25 bps cut would have further lifted sentiments and assured the markets that the monetary easing cycle is on course which would be followed by further cuts in rates during the course of the year.
The CII, however, welcomes the lowering of the statutory liquidity ratio by 50 bps which, by easing liquidity in the system, would ensure that funds would be available to the banking sector for onward lending.
This in turn would provide a fillip investment and growth Mr Shriram stated that with the recent change in inflation dynamics, particularly the steep slide of global oil and commodity prices and current account deficit under control, there is enough space to maneuver policy in favor of growth.
CII is hopeful that the RBI would resume its accommodative monetary policy stance in the next policy review and work in tandem with the government to bring the investment momentum back to the economy. CII is looking to see a 100 bps reduction in headline rates in the course of the year.