April 5, 2024: The Reserve Bank of India (RBI) today maintained a status quo on key policy rate amid signs of better growth and moderating inflation. Announcing the first bi-monthly monetary policy of the financial year 2024-25 (FY25) today, the six-member monetary policy committee of the RBI, led by Governor Shaktikanta Das, left the repo rate unchanged at 6.50% for the seventh time in a row.
For the uninitiated, the repo rate is the interest the RBI charged form banks to offer short-term loans in India.
At present, repo rate stands at 6.5%; standing deposit facility rate at 6.25%; marginal standing facility rate at 6.75%; bank rate at 6.75% and the fixed reverse repo rate at 3.35%.
The move to keep the repo rate unchanged is widely expected as prices are trending lower though food inflation remains a risk: All 56 economists in the March 15-22 Reuters poll expected the RBI to hold the repo rate at 6.50% while most expect no change at least until July.
Impact on housing sector
According to experts, this will boost demand for housing in India.
“The RBI’s decision to maintain status quo is a welcome development for the Indian housing market. The policy continuity fosters a predictable interest rate environment, which is crucial for both homebuyers and developers. We anticipate sustained demand, especially in the mid-tier and high-income segments,” says Samantak Das, chief economist and head- research & REIS, India, JLL.
“We foresee an escalation in demand, particularly within the affordable and mid-segment housing markets. This trend is expected to persist, with hopes of a future reduction in the repo rate,” says Prashant Sharma, president of the National Real Estate Development Council (NAREDCO) Maharashtra.
Avneesh Sood, director of Eros Group, is of the view that further buoy consumer sentiment and facilitate robust growth in the coming quarters. According to Sood, with over 60% of home loans in India being on floating interest rates, any alteration in the repo rate could significantly influence borrowing costs.
“With stable interest rates, homebuyers can proceed with assurance, fostering sustained development in the housing market. Notably, the stability in the repo rate directly impacts the lending landscape, with potential implications on home loan EMIs,” says Sood.
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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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