RBI Monetary Policy Live Updates: Repo Rate Unchanged At 5.5%; FY26 Inflation Projection Lowered

"Banks not asking borrowers to go to market, short term rates are lower than bank rates. Cash surplus in corporates is large, a rate cut would not have made too much of an impact on consumer demand. Deposit transmission is not a straight linkage with the policy rate. Goal is to give depositors a fair rate versus market," said Ashwini Tiwari, managing director of SBI told NDTV Profit.

"A 25 bps rate cut this time could have been negative for the banking sector as asset prices will come down, loan rates will come down but deposit rates will take time. So banks would not transmit to incremental lending," said Jaideep Iyer, Head of Strategy, RBL Bank.

Devang Shah, head of fixed income at Axis Mutual Fund, said the RBI is nearing the end of the rate cut cycle and may have 25-50 bps reduction more. But a repo of 4% is highly unlikely and the benchmark may be in the 5-5.5% range.

"The RBI is at a wait-and-watch mode and will see how some of the earlier monetary easing transmits into the system. The macro data is mixed," said Sakshi Gupta, Principal Economist at HDFC Bank.

"Both external and internal economic indicators do not support the 'pause case'. Having done a large rate cut since February, could you wait for some more data, probably yes," said Maneesh Dangi, Founder, Macro Mosaic Investing and Research.

RBI Governor Sanjay Malhotra said as the CRR cut comes into effect starting September, liquidity conditions will be supported further.

"In the credit market, the weighted average lending rate of scheduled commercial banks declined by 71 bps. On outstanding rupee loans, there was 39 bps reduction between Feb and June in the weighted average lending rate. Going ahead, the RBI will remain nimble and flexible in liquidity management," he said.