The Reserve Bank of India (RBI) has maintained its policy rate at 6.5 percent while revising the growth forecast upwards to 7.2 percent for the financial year 2024-25 from the previous 7 percent, experts said on Friday.
Read more: RBI keeps repo rate steady at 6.5% for 8th consecutive time (newsarenaindia.com)
Realtors expressed optimism, noting that the decision to keep the repo rate unchanged is expected to stabilize the real estate sector.
The Monetary Policy Committee, consisting of three RBI members and three external members, decided to keep the repo rate steady at 6.5 percent for the eighth consecutive meeting. RBI Governor Shaktikanta Das emphasized the bank's cautious stance of "withdrawal of accommodation."
Samantak Das, Chief Economist and Head of Research and REIS, India, JLL, noted that recent rate cuts by the European Central Bank and potential Federal Reserve rate cuts influence RBI's considerations, but domestic factors remain crucial. "With controlled inflation paving the way for future rate cuts, 2024 promises heightened affordability in the residential real estate sector," Das said. He projected a 15-20 percent increase in residential sales in India's top seven markets over 2023's historic high.
Equirus Economist Anitha Rangan highlighted the RBI's focus on domestic inflation, driven by the food basket, while maintaining the inflation target at 4.5 percent. "The growth revision to 7.2 percent reflects a cautious approach," Rangan said.
CRISIL Chief Economist Dharmakirti Joshi noted the RBI's commitment to controlling CPI inflation around 4 percent. "Food inflation remains a concern, but growth optimism led to a 20 basis point GDP forecast increase," Joshi said, predicting rate cuts starting in October.
Real estate body CREDAI West Bengal president and Merlin Group chairman Sushil Mohta welcomed the unchanged repo rate, emphasizing no immediate impact on real estate or home loan EMIs. "This will keep the residential real estate sector buoyant," he said.
Dharmendra Raichura, VP & Head of Finance of Ashar Group, mentioned that while the unchanged rate is industry-agnostic, the real estate sector anticipates lower interest rates later this year, potentially spurring housing demand and growth.
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