State Bank of India Chairman C.S. Setty said a pause in the repo rate will help stabilise India’s economic growth [1].
This position comes as the Reserve Bank of India's Monetary Policy Committee meets this week. A decision to hold rates could influence the cost of borrowing for businesses and consumers, potentially sustaining the momentum of national development and industrial investment.
Setty said that a pause in the repo rate by the Monetary Policy Committee is appropriate at this juncture [3]. He said that such a move would support entrepreneurship and improve market access, which are critical for investing in India’s large young population [2].
The chairman highlighted the resilience of corporate spending amid global volatility. "Companies have not yet pulled back on capex plans despite the West Asia conflict," Setty said [2].
Maintaining the current rate is viewed as a mechanism to ensure that capital expenditure remains steady. By avoiding a rate hike, the central bank can prevent an increase in borrowing costs that might otherwise discourage firms from expanding their operations, or investing in new infrastructure [1].
Setty said that stabilizing growth is essential for long-term economic health. He said a pause in the repo rate will help stabilise growth [1]. This approach aims to balance the need for inflation control, with the necessity of fostering a supportive environment for domestic business growth [2].
“"A pause in the repo rate will help stabilise growth."”
The SBI Chairman's advocacy for a rate pause suggests a priority on growth over aggressive inflation tightening. If the MPC follows this logic, it indicates a belief that the Indian economy can absorb current interest levels without stifling the capital expenditure necessary for long-term industrial expansion, even while facing geopolitical headwinds in West Asia.
