June 8, 2023: The Reserve Bank of India (RBI) decided to leave the repo rate unchanged at 6.5% while announcing the second monetary policy for this financial year (FY24). The decision of the six-member monetary policy committee (MPC), headed by RBI governor Shaktikanta Das, is in line with industry expectations.
The standing deposit facility (SDF) rate have remains unchanged at 6.25% and the marginal standing facility (MSF) rate and the bank rate at 6.75%. The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target while supporting growth.
Analysts and experts have forecast the Reserve Bank of India (RBI) to maintain a status quo on its benchmark lending rate during its policy announcement on June 8, 2023. They were of the view that the banking regulator would factor in the easing of retail inflation in April (consumer price-based inflation declined to an 18-month low of 4.7% in April), and the potential for further decline while it watches how past hikes in the repo rate play out.
In its April policy meet, the RBI hit a pause button on the rate hike cycle, leaving the repo rate unchanged at 6.50%. The apex bank has raised the repo rate by 250 basis points since May 2022. The repo rate, at which the RBI lends funds to scheduled banks in India, currently stands at 6.50%.
Impact on real estate
The real estate industry has welcomed the RBI decision.
“On the back of RBI’s decision to maintain the repo rate at 6.5%, we expect both housing supply and demand to sustain its ongoing momentum. However, given that the inflation is at an 18-month low, there is scope for the RBI to reduce the repo rates in the upcoming MPC meetings, to stimulate growth across all industries,” says Credai national president Boman Irani.
“As a snowball effect, respite in home loan interest rate will augur well to fuel uptick in housing sales across the segments. Now, the discerning homebuyers should avail of the benefits of cooling inflation, stable home loan rates, conducive real estate market dynamics in the backdrop of buoyancy in growth, domestic demand and availability of sufficient liquidity,” says Naredco national vice-president Niranjan Hiranandani.
With the festive season in tailwinds, a hiatus in interest rate hike will act as a growth catalyst and boost sales velocity, he adds.
An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
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