RBI Keeps Repo Rate Unchanged, Signals Economic Balance
New Delhi : The Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 6.5%, continuing its current monetary policy stance. This decision comes amidst mixed economic signals, where there are signs of a decline in inflation, but it still remains above the central bank’s comfort level. The RBI is attempting to strike a balance between boosting economic growth and controlling inflation, while also acknowledging the potential impact of external factors such as global economic conditions and geopolitical tensions.
By maintaining the repo rate, the RBI aims to provide stability to financial markets and support the ongoing recovery in key sectors like manufacturing and services. Analysts believe this decision reflects the central bank’s cautious approach, allowing for careful assessment of economic indicators before considering any adjustments. While businesses and consumers may find navigating this environment challenging, the RBI’s commitment to monitoring inflation trends and growth prospects remains crucial in shaping India’s economic landscape.
On the decision, Mr. Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd., said, The RBI’s decision to hold rates steady aligns with expectations, to keep inflation under check. While the recent rate cut by the US Federal Reserve has sparked similar hopes in India, the domestic situation remains distinct, with the central bank prioritizing inflation management within its target range. Yet policy stability bodes well in the ongoing festive season which promises to be a significant phase in terms of real estate demand as the industry is hopeful of the continued rise in residential sales. As and when a rate cut is anticipated soon, which, when implemented, will benefit both homebuyers and real estate developers to capitalize on the market and strengthen overall economic growth.
Mr. Aman Sarin, Director & CEO, Anant Raj Ltd., remarked that “The RBI’s decision to keep the repo rate unchanged was expected, considering ongoing inflation concerns and global geopolitical uncertainties. However, with each MPC meeting, the likelihood of a rate cut increases, and we could see one in the coming reviews if current improvements continue.
Currently, home loan interest rates hover around 9.25%, a level that remains manageable for many borrowers. Also, given the stable rates for over two years, real estate demand has consistently grown, fueled by rising incomes, lifestyle upgrades, and economic growth. We are already seeing strong demand this festive season, which is likely to continue, regardless of any changes in interest rates.”
Mr. Mohit Jain, Managing Director, Krisumi Corporation, welcomed the RBI’s decision, stating that “The apex bank’s stance to keep the rates unchanged for the tenth consecutive time is on the expected lines. While the real estate industry was hoping for an interest rate reduction, a status quo is the next best outcome for the industry. Stable rates ensure consistent EMIs, giving homebuyers the confidence to plan their purchases. Furthermore, the expectation of potential rate cuts in the coming months is also boosting optimism in the real estate market and we expect the robustness in demand to continue over the next few years.”
Mr. Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution Pvt Ltd, stated, “The RBI’s decision to keep the repo rate unchanged wasn’t a surprise, though many expected a rate cut, which could have boosted retail loan demand during the festive season.
However, lending institutions are stepping up with festive offers. For example, SBI is offering car loans starting at 9.05% interest with zero processing fees, providing borrowers with significant savings. HDFC Bank has launched its “Festive Treats” campaign, with car loans starting from 9.40% interest and up to 100% financing on select models, along with special cashback and down payment discounts.
These offers are aimed at capitalizing on the festive demand and helping customers secure better deals.”