Press Release

ASSOCHAM impresses upon RBI to pause policy rate hikes

ASSOCHAM impressed upon the RBI Monetary Policy Committee to give a pause to its rate hike cycle in view of the inflation taking a reverse path downward and businesses facing the pressure of high cost of borrowing.

New Delhi, 6th February 2022: ASSOCHAM impressed upon the RBI Monetary Policy Committee to give a pause to its rate hike cycle in view of the inflation taking a reverse path downward and businesses facing the pressure of high cost of borrowing.  

'' At a time when India stands out as one of the fastest growing economies of the world, a pause in the policy rate hike would provide stimulus to the growth trajectory”, ASSOCHAM Secretary General Mr Deepak Sood said, urging the RBI - MPC to halt any more increase in the benchmark rates.  

The RBI-MPS has begun its deliberations and is expected to announce the outcome of the meeting on February 8, 2023.   

The RBI Repo rate has been already hiked to 6.25 per cent, resulting in impact on EMIs in housing loans and personal loans impacting the consumer demand. The rates have been raised by 225 basis points in the fiscal 2022-23 in view of the global money tightening and inflationary pressures. 

 On the other hand, the project cost of new investment is increasing because of the heightened interest rates.  Besides, service of the existing debt is also exerting pressure on the corporates .  

''We need to keep accelerating both consumer demand and investment for sustainable growth in the fiscal year beginning April. While the Economic Survey has projected the growth for FY'24 as 6.5 per cent, it is lower than the estimates of the current fiscal. Growth deserves a continuous stimulus," the ASSOCHAM Secretary General said.   

As far as inflation is concerned, the trajectory is downward. The retail inflation has stayed below the upper band of six per cent set by RBI, for the past two months.    With the Rabi harvest about to begin from April, food inflation should witness drop, Mr Sood said.