9th Oct 2024: The Reserve Bank of India (RBI) has decided to maintain the repo rate at 6.5%, marking a continuation of its current monetary policy stance. This decision comes amid mixed economic signals, with inflation showing signs of moderation but still remaining above the central bank’s comfort zone. The RBI aims to strike a balance between fostering economic growth and controlling inflation, recognizing the potential impact of external factors such as global economic conditions and geopolitical tensions.
By holding the repo rate steady, the RBI hopes to provide stability to the financial markets and support ongoing recovery in key sectors like manufacturing and services. Analysts suggest that the decision reflects the central bank’s cautious approach, allowing for a careful assessment of economic indicators before considering any adjustments. As businesses and consumers navigate this environment, the RBI’s commitment to monitoring inflation trends and growth prospects remains critical in shaping India’s economic landscape.
Anuj Puri, Chairman – ANAROCK Group
With the fundamentals of the Indian economy remaining strong despite global headwinds, geopolitical tensions and inflation well within control, the RBI has once again decided to keep the repo rates unchanged at 6.5% – thus helping the housing market to maintain momentum during the festive season. While a repo rate cut would have been preferable, it is clear that the RBI is on a tightrope walk and must keep various macro-economic factors in mind.
From the point of view of homebuyers, the relatively affordable home loan interest rate regime will continue at a critical time for the Indian housing market – the festive season – amid rising housing prices and tapered sales. Q3 2024 saw average housing prices rise by a cumulative 23% in the top 7 cities even as average prices in these markets collectively rose to approx. INR 8,390 per sq. ft. by Q3 2024-end, from approx. INR 6,800 per sq. ft. in Q3 2023.
Housing sales also declined to an extent in Q3 2024, even as prices rose. As per ANAROCK data, Q3 2024 saw residential sales go down by 11% annually against Q3 2023. New launches also fell by 19% in this period.
The unchanged home loan rates are much-needed demand support in the ongoing festive quarter. We are expecting faster sales momentum in Q4 2024 when compared to the preceding quarter. This year’s festive quarter may see similar demand to that seen in this period a year ago, if not higher. Over 1.27 lakh units were sold across the top 7 cities back in Q4 2023. Unchanged interest rates will play and important role in achieving and maintaining this momentum.
Mr. Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd
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. Mohit Jain, Managing Director, Krisumi Corporation
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. Pankaj Kalra, CEO, Essar Oil & Gas Exploration & Production Ltd (EOGEPL)
“The RBI’s decision to keep the interest rate steady at 6.5% reflects a measured response to current inflationary concerns. This decision provides a stable economic environment that is vital for planning and investing in long-term project financing and capital allocation. The decision to uphold the ‘Withdrawal of Accommodation’ stance aligns with our expectations and supports economic stability, ensuring that we can continue our exploration and production activities without the added uncertainty of fluctuating borrowing costs. At EOGEPL, we will use this stable interest rate to promote growth and help strengthen India’s energy sector.”