Commenting on the monetary policy announcement by RBI, Sangita Reddy, President, FICCI said, RBI's decision to hold on to the policy rate comes on the back of inflation moving beyond the central bank's comfort zone. While the outlook for inflation remains uncertain, FICCI is of the view that this is largely a supply side phenomenon. While the RBI has lowered the repo rate by 135 basis points since February 2019, the transmission of these rate cuts remains slow and the weighted average lending rates of scheduled commercial banks continue to remain high. The lending rates must move down if demand is to be supported in the economy, added Reddy. Besides cost of credit, the flow of funds to the commercial sector is an equally important area to look at. The NBFC sector remains impaired and will take some time to recover.
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