For people who have taken loans or who are planning to take, may expect an increase in their EMIs to accommodate the rate hike.
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The RBI’s rate-setting panel on Thursday did not hiked the repo rate and it stands at 6.5%.
The RBI’s rate-setting panel on Thursday started its three-day meeting amid expectations that the central bank may go for 25 basis points hike in benchmark interest rate.
Repo Rate Unchanged
Experts were believing that this would have been probably the last in the current monetary tightening cycle that began in May 2022.
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The interest rate on home loans rose when the Reserve Bank of India announced a hike in Repo rate in February.
Repo rate is the rate at which the RBI lends money to commercial banks.
Boman Irani, president-elect, CREDAI National, said, “We laud the RBI for maintaining the repo rate, in a move that is bound to go a long way in sustaining the sales momentum that we’ve witnessed in the residential segment.”
“Given the potential adverse impact of a hike in repo rate and its ripple effect on both housing demand and supply, we, at CREDAI, are extremely pleased and welcome the central bank’s decision. This move would provide a further boost for the affordable and mid income housing segments, in particular,” Irani added.
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“Coupled with the Central Government also hiking its outlay for the PMAY program during this year’s Budget, we expect the demand for affordable housing to grow in the upcoming quarters,” Irani highlighted.
Meanwhile, according to Knight Frank India, despite the fifth repo rate hike of 25 BPS in February 2023, which took the cumulative increase to 250 BPS since May 2022, home buyers continued to commit to purchase of residential property and the same is reflected in the numbers in Mumbai.
Reserve Bank Governor Shaktikanta Das-headed Monetary Policy Committee took into account various domestic and global factors before coming out with the first bi-monthly monetary policy for fiscal 2023-24.
The decision of the six-member rate setting panel was announced by the Governor.
The central bank had already increased repo rate by a total of 250 basis points since May in a bid to contain inflation, though it has continued to remain above the RBI’s comfort zone of 6 per cent most of the time.
The RBI has so far raised repo rate six times including the off-cycle surprise increase of 40 basis points in May 2022.
The RBI has been tasked to ensure that retail inflation remains at 4 per cent with a margin of +/-2 per cent. However, it failed to keep inflation rate below six per cent for three consecutive quarters beginning January 2022.
The MPC consists of three RBI officials and three external members appointed by the central government.
The external members are Shashanka Bhide (Honorary Senior Advisor, National Council of Applied Economic Research, Delhi); Ashima Goyal (Emeritus Professor, Indira Gandhi Institute of Development Research, Mumbai); and Jayanth R Varma (Professor, Indian Institute of Management, Ahmedabad).
