New Delhi:
The Reserve Bank of India on Friday decided to keep the key repo rate unchanged at 6.5 per cent in its first monetary policy review of financial year 2024-25. This marks the seventh consecutive time the rate has been held steady, aligning with market anticipations. The central bank’s monetary policy committee (MPC) decided to continue its policy of ‘withdrawal of accommodation’.
RBI governor Shaktikanta Das noted a steady decline in core inflation over the past nine months. “The fuel component of the Consumer Price Index (CPI) has remained in deflation for six months.” He added that “robust growth prospects provide the policy space to remain focused on inflation.”
Speaking on the importance of a deflationary approach in monetary policy, he said, “Monetary policy must continue to be deflationary,” and affirmed the Monetary Policy Committee’s (MPC) dedication to “aligning inflation with its target.” Das elaborated on the central bank’s approach, explaining that it “reflects careful consideration of robust economic indicators, taking into account factors such as monsoon performance, US Federal Reserve decisions, and overall economic growth, ensuring continued high growth prospects for the country.”
Adhil Shetty, CEO of Bankbazaar.com, provided insights on the potential future adjustments, saying, “The expectation now is for rates to potentially adjust towards the end of this year, when inflation moderates, and the food inflation remains within expected parameters.”
How will the RBI’s stance impact borrowers?
RBI Policy: Impact on home loans
“A steady repo rate indicates a consistent outlook for interest rates for borrowers, offering reassurance to homebuyers about stable loan interest rates. This is advantageous for both new loans and existing ones with floating rates,” Shetty said. He further added that such stability not only makes housing more affordable for potential buyers but also boosts consumer confidence, thereby supporting demand within the real estate sector.
According to Anuj Puri, Chairman, ANAROCK Group, the decision to maintain status quo will keep the ongoing residential real estate sales momentum on course and unimpeded. Aspiring homebuyers eyeing a purchase will proceed with confidence.
