In the inaugural monetary policy announcement for the financial year 2024-25, Reserve Bank of India (RBI) Governor Shaktikanta Das revealed that the key policy repo rate would remain unchanged at 6.5%, marking the seventh consecutive maintenance. The two-day review meeting of the RBI’s Monetary Policy Committee (MPC) concluded on April 5, affirming the decision made after commencing on April 3. Led by Governor Das, the six-member MPC remains steadfast in its commitment to retaining the policy stance at ‘withdrawal of accommodation’. Additionally, the RBI has forecasted India’s real GDP growth rate for FY25 at 7%.
Insights from an Industry Specialist:
Mr. Aman Sarin, Director & Chief Executive Officer, Anant Raj Limited
We appreciate the RBI’s decision to keep the repo rate unchanged at 6.5%, marking the seventh consecutive instance of maintaining stability in the rate.
Stable interest rates are beneficial for the economy and are conducive to positive consumer sentiments. Home loan borrowers are finding relief due to the steady interest rates, enabling them to proceed with their borrowing plans confidently. This will also positively impact the Housing Sector and its expansion due to steady Cost.
Mr. Ravi Ramesh Pilani, MD at Pilani Realty.
The stable repo rate indicates a similar outlook for home loan interest rates. This provides some certainty to home buyers in terms of what to expect when it comes to borrowing costs.
This stability can be seen as positive for both new home buyers looking for loans and existing borrowers with floating rates, offering some relief in terms of financial planning.
For borrowers with floating-rate loans, a stable repo rate reduces the risk of a sudden jump in their monthly EMIs due to rising interest rates. This allows for better budgeting and financial planning.
A stable economic environment, often signaled by a steady repo rate, can boost consumer confidence. This might encourage people to spend more, potentially benefiting businesses and the overall economy.
Dr. Mohit Ramsinghani – Chief of Sales – Runwal
An interest rate cut would have been a heads up for India’s real estate market. lowering borrowing costs and stimulating demand. Even though the year-long downward trend in core inflation is encouraging, inflation is still close to the upper band of the apex bank’s 2-6 per cent target, leaving little room for any rate cut. Interest rates are likely to remain stable, the demand for housing in the country would continue to get a boost.
Mr. Amit Goenka, MD and CEO at Nisus Finance.
Most real estate developers were hoping for a rate cut announcement which would have further strengthened the demand for housing. However since the economy seems to be in a deflationary phase a higher surplus in the hands of consumers is likely to help keep demand for housing robust.
Sowdamini Bhat, CEO, LoanXpress
The Reserve Bank of India (RBI) is marking its 90th year, a journey where it has played a key part in keeping India’s economy stable and growing. The RBI isn’t just any bank; it adapts to changing times and does a lot more to guide the economy. One of its main tasks, done by the Monetary Policy Committee (MPC), is to decide on the interest rate for banks, known as the policy repo rate. Right now, they’ve decided to keep it steady at 6.50%, trying to make sure the economy grows without prices going up too high.
India’s economy is doing well, pushing forward even when prices for things like food try to go up too quickly. Despite problems in the world economy, like disagreements between countries and issues with trade, India is standing strong, thanks to its industries and services. The RBI expects that in the coming year, the economy will grow by 7.0%, driven by people investing and spending. This growth is a big goal for the RBI as it continues to keep the economy on a stable path.
Mr. Sanjay Sinha, Independent Director, Beacon Trusteeship Ltd.
RBI withholding the policy rate at the existing level of 6.5% as well the stance of policy – withdrawal of accommodation- is on the expected line particularly due to the retail inflation (CPI) hovering above 5%. The likelihood of supply shocks arising out of increased spendings due to the general election kicking in is also seen as a threat to the price stability. Another factor which has weighed in is the ascendency in crude oil prices, which touched the highest levels a couple of days ago since October last, on concerns about supply disruptions. As India imports 85% of its crude oil requirements, increase in its prices has direct implications on price stability.
Mr. Pratapsingh Nathani, chairman and MD at Beacon Trusteeship
On the momentous occasion of its 90th anniversary, the Reserve Bank of India (RBI) not only celebrates a legacy of facilitating India’s economic stability and development but also reasserts its dynamic and comprehensive approach as a central bank. Reflecting upon a history of adaptability and resilience, the RBI continues to solidify its role through the adept functioning of the Monetary Policy Committee (MPC). The MPC’s role has been pivotal in calibrating the policy repo rate which currently remains unchanged at 6.50%, a strategic decision aimed at balancing the imperatives of growth and inflation.
As India’s economy demonstrates robust momentum, the RBI’s policies have been influential in managing inflation dynamics, particularly in the realm of food prices, thereby ensuring overall price stability. Despite the ongoing global economic challenges, including geopolitical and trade tensions, India’s economic resilience shines through, underscored by the strength of its industrial and service sectors.
Within the broader context of the global economy, the RBI remains cautiously optimistic, acknowledging external uncertainties yet remaining vigilant in its commitment to inflation forecasting. This careful monitoring is crucial to keeping inflation within the targeted bounds. Looking ahead, the RBI projects a promising GDP growth of 7.0% for the fiscal year 2024-25, buoyed by investment and consumption patterns that signal the ongoing vitality and potential of the Indian economy. This positive outlook underscores the RBI’s multifaceted strategies for fostering sustained economic stability and growth.