RADHIKA RAO, ECONOMIST, DBS BANK, SINGAPORE
"Policy guidance reinforced that the MPC's priority is to secure growth impulses and preserve policy room to meet this objective, diverging from the global policy shifts, particularly the U.S. Fed."
"Even as inflation risks were highlighted on imported pressures and volatility in food, 'flexibility' in the price stability mandate will see the recovery path dictate the policy direction."
"The reverse repo rate was left unchanged, but the liquidity absorption framework will be rebalanced, away from fixed and into variable auctions, with the 14-day as an anchor. Either way, existing liquidity has already been repriced higher courtesy the string of VRRR (variable rate reverse repo) auctions, which in turn has driven money market/short-term rates up."
"Persistence in the banking system liquidity at levels well in excess of pre-pandemic surplus will require further action into 2022."
GARIMA KAPOOR, ECONOMIST - INSTITUTIONAL EQUITIES, ELARA CAPITAL, MUMBAI
"Notwithstanding improving economic outlook and emerging concerns on inflation, the MPC held rates steady and retained guidance amid Omicron-related uncertainty and to support broad-based and durable recovery. However, as expected, RBI continued to amble along the liquidity policy normalisation path by hiking VRRR (variable rate reverse repo) quantum, thus laying the groundwork for a likely first reverse repo rate hike early next year."
"We expect MPC to hike reverse repo over Feb 2022 and April 2022 and are penciling in the first repo rate hike in August 2022."
UPASNA BHARDWAJ, SENIOR ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
"The MPC expectedly maintained status quo on the policy rates and stance. The rhetoric too has remained focused on maintaining durable growth as long as inflation remains well in check."
"We continue to expect RBI to fine-tune the surplus liquidity to manage rates and consequently provide guidance on the operating target rate shifting closer to the repo rate. We retain our base case of reverse repo rate hike in February."
SUVODEEP RAKSHIT, SENIOR ECONOMIST, KOTAK INSTITUTIONAL EQUITIES, MUMBAI
"The policy was as expected and cautious on the uncertainty due to the Omicron variant. Also, the RBI continued with the liquidity normalisation on expected lines without any explicit signal of liquidity withdrawal. The inflation estimates are also lower than what the markets are expecting."
"Broadly, the policy is more dovish than expected, possibly given the uncertainty from the new COVID variant. If the Omicron variant is benign, we expect a reverse repo hike of around 20 bps possible in the February policy and a tad more aggressive liquidity withdrawal."
RUPA REGE NITSURE, GROUP CHIEF ECONOMIST, L&T FINANCIAL HOLDINGS, MUMBAI
"It's a status quo policy in terms of rates, stance and projections. The RBI's plan to rebalance liquidity by increasing the variable reverse repo quantum will raise short-term rates in a gradual fashion without creating spikes in the long-term cost of borrowing. The policy appropriately reflects the concerns created by the emergence of Omicron and the associated uncertainty."
VIVEK KUMAR, ECONOMIST, QUANTECO RESEARCH, MUMBAI
"Despite improvement in growth momentum and emergence of some upside risk to inflation, the central bank resisted any direct form of interest rate normalisation while maintaining its emphasis on gradual calibration of liquidity to reinforce alignment of short-term money market rates towards the upper end of the policy rate corridor. The risk from Omicron seems to have thwarted the formal commencement of interest rate normalisation."
"While we continue to believe that the economy and financial markets are poised for a token beginning of formal interest rate normalisation, the RBI could remain in a wait-and-watch mode with any near-term action policy normalisation dependent upon the spread and virulence of Omicron along with its implications for vaccine efficacy and spillover on economic activity."
"As of now, we put on hold our call of a 20 bps hike in the reverse repo rate in February 2022 and await clarity on the pandemic situation."
SAKSHI GUPTA, SENIOR ECONOMIST, HDFC BANK, GURUGRAM
"The RBI policy was more dovish than our expectations and the central bank kept its stance, policy rate and corridor unchanged at its meeting today."
"The central bank erred on the side of caution, emphasizing that while growth has picked up, it is still not sustainable. The Omicron risk, as expected, found its place in the policy statement."
"The RBI's inflation forecast, unchanged for FY22 at 5.3%, seemed to play down the inflationary risks and viewed them as more transitory than permanent in nature."
"We expect the Feb policy to possibly be the turning point (at least in terms of reverse repo rate hike) for the policy if the Omicron virus risk is managed."
"On inflation, we expect prints to be higher than currently being expected and average at 5.6% in FY22."
(Reporting by Rama Venkat and Chandini Monnappa in Bengaluru; Editing by Devika Syamnath)