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RBI Monetary Policy 2023; repo rate remains unchanged

Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) in its second bi-monthly monetary policy meeting of FY24 decided to leave the repo rate unchanged at 6.5%.

The monetary policy committee (MPC), which has three members from the RBI and three external members, has left the repo rate unchanged at 6.50 percent for a second straight meeting. Governor Shaktikanta Das said the MPC voted unanimously to leave repo rate unchanged. Standing Deposit Facility Rate remains at 6.25%; while Marginal Standing Facility Rate and Bank Rate also unchanged at 6.75%. MPC voted 5 members to 1 to remain focused on withdrawal.

Industry Expert’s opinion;

Mr. Atul Banshal, Director-Finance, Omaxe Ltd.

We welcome the RBI’s decision to maintain the status quo on key policy interest rates. As anticipated, the RBI has displayed a growth-supportive policy stance.

However, following a series of successive policy rate hikes, the real estate sector had anticipated some relief from the central bank in the form of a modest rate cut. Such a move would have bolstered demand and, subsequently, the overall economy. Consequently, we maintain our expectation that the RBI will opt for a policy rate reduction in the next review meeting, providing a much-needed impetus to various sectors, including real estate, and fostering economic growth

Mr. Vimal Nadar, Head of Research at Colliers India

The Indian economy stands out strong amidst weakening global economic growth, at an estimated 6.5% for the year 2023-24. Headline inflation continues to lower, but still poses upside risks on the back of volatile global conditions. RBI’s unabated commitment towards ‘withdrawal of accommodation’ is on expected lines and essential in the current uncertain global economic environment, marred with tight financial conditions, elevated inflation & geopolitical tensions. RBI’s move to keep the repo rate unchanged at 6.5% reinforces the Central Banks’s effort to support domestic growth and create a conducive lending ecosystem.

The latest inflation at 4.7% is encouraging, however needs to be aligned with other high-frequency indicators to buoy growth in a sustainable manner. As home loan rates are already at elevated levels of 9% and above, this is a significant breather for lenders, developers & homebuyers. First time homebuyers will be better placed to make their home buying decision in a stable lending rate regime. Fence sitters in the affordable & mid segment will have greater visibility of their EMIs & thus effect buying.

 Mr. Amit Goyal, Managing Director, India Sotheby’s International Realty

In line with expectations, the Reserve Bank of India (RBI) has maintained the policy rate at 6.5% for the second consecutive time, following a series of six consecutive rate hikes. The RBI’s decision reflects their cautious approach in light of the persistent inflationary pressures and their potential impact on domestic consumption growth.

However, the positive aspect is that the pause in rate hikes will instil a sense of optimism among borrowers and we expect the housing sales momentum to continue.

Mr Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd

We appreciate the change in policy approach by the apex bank and decision to maintain the policy rate, instead of voting for another increase. This demonstrates a positive intent towards supporting the housing market and benefiting homebuyers.

Home loan borrowers have embraced the previous interest rate hikes, and as long as the home loan interest rates hover around 9% per annum, it is unlikely to have a significant impact on housing demand.

Mr. V Swaminathan, executive chairman, Andromeda sales and Apnapaisa.com

The RBI’s decision to maintain the policy rates unchanged is positive news for borrowers, especially considering the global apprehensions that persist in advanced economies. However, the Reserve Bank of India remains focused on preserving price and financial stability while ensuring adequate flow of financial resources to all productive sectors of the economy.

It is encouraging to note that domestic macroeconomic fundamentals are strengthening, with resilient economic activities, moderated inflation, comfortable current account deficit, and robust credit growth.

If the situation persists or improves further, we can anticipate a potential rate cut in the next monetary policy review.

Mr. Piyush Bothra, Co-founder and CFO, Square Yards

The Reserve Bank of India’s decision to maintain the status quo for the second time is a welcome move and in line with the expectations. This affirms the view that interest rates will only have one direction which is downwards. This is a big positive for the home buyer as they know that their EMIs down the line will only decrease further. A lot of fence sitters are expected to jump in, and the developers are likely to cash in on this pent-up demand. We firmly believe that we are at the beginning of a multi-year real estate bull market buoyed by high disposable incomes, high affordability and moderate-to-low interest rates.

Mr. Ishaan Singh, Director, AIPL Group

We commend the apex bank for deciding to maintain the policy rate, rather than voting for another increase. This decision showcases a positive commitment to supporting the housing market and ensuring favourable conditions for homebuyers.

For updates on monetary policy- visit- https://constrofacilitator.com/


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