Mr. Piyush Bothra, Co-Founder and CFO, Square Yards
“Interest rates significantly influence consumer sentiments, particularly affecting the majority of buyers in the low-to-mid segment. The current market upcycle is driven by the premium segment, which is relatively less sensitive to minor interest rate changes. Hence, the central bank’s decision to maintain the status quo is a bit disappointing. A reduction in the benchmark rates would have been ideal as it would have given further buoyancy to the real estate market, especially in the low-to-mid segment, and would have helped a lot of first-time home buyers realize their dream of owning a house.
Although the FY25 forecast for economic growth has been upwardly revised to 7.2% from 7%, and inflation is expected to remain within the target band of 2-6%, signaling towards a positive macroeconomic scenario that will buoy the homebuyer sentiments. Given the current outlook, we anticipate the demand momentum to remain strong in property markets across all major cities in India.”
Mr. Shrinivas Rao, FRICS, CEO, Vestian
“RBI kept the repo rate stable at 6.5% for the eighth consecutive time on the back of strong growth momentum. It is a welcome move as headline inflation is still above the RBI’s upper limit of 4% despite marginally easing to 4.83% in April 2024 over the previous month. Moreover, the inflation is anticipated to increase in May 2024 due to an increase in the prices of food items amid nationwide heat waves.
This is probably the last time RBI will maintain status quo. The repo rate may start its descent from the upcoming MPC meeting as higher kharif production is expected amid an above-normal monsoon, easing the prices of food items. Furthermore, this reduction in repo rates may provide respite to the real estate sector and fuel the growth momentum further.”
Mr Ashwin Chadha, CEO, India Sotheby’s International Realty
“As expected, the MPC has decided to keep the repo rate unchanged at 6.5%. This decision aligns with the MPC’s calibrated measures to tackle persistent inflation. The RBI has successfully maintained the resilience of the Indian economy, contributing to sustained growth momentum even amidst a challenging global environment.
The good news is that CPI inflation continues to soften, and the GDP growth rate is projected to remain above 7% for all quarters of FY2024-25. Additionally, the monsoon is expected to be favorable, reducing potential risks to the economy. Given these positive indicators, we anticipate optimistic sentiments to continue, also the upward trend in housing demand, particularly in the high-end and luxury segments, will persist for the foreseeable future.”
Mr Vimal Nadar, Senior Director & Head of Research, Colliers India
“In the first MPC meeting after the recently concluded general elections, the RBI has maintained status quo. The repo rate remains at 6.5% and withdrawal of accommodation continues. This decision comes against the backdrop of a concerted effort to contain inflation close to 4% on a durable basis. Furthermore, an upward revision of FY 2025 GDP growth rate projection by 20 bps to 7.2% will fuel business optimism across sectors including real estate.
A stable financing environment will continue to benefit homebuyers and developers in both residential and commercial real estate. As central banks across the world ponder over rate cuts, the timing and pace of such reductions in India will remain a key monitorable and should provide further boost to residential activity in the ongoing fiscal year. Developers & institutional investors in the real estate sector will meanwhile continue to expect continuation of structural reforms and policy support from the incoming Central government.”
Mr. Raoul Kapoor, Co-CEO, Andromeda Sales and Distribution Pvt Ltd.
“We welcome the Reserve Bank of India’s decision to maintain the repo rate, as it brings stability to the economic scenario. The RBI commitment to controlling inflation remains crucial, to maintain growth and resilience. The revised GDP growth projection, now expected to be between 7.2% and 7.3% for FY25, aligns well for the economy.
A robust economy, coupled with stable interest rates, promises to elevate disposable incomes and bolster borrowers confidence. It appears that the RBI MPC may continue this pause for the next couple of meetings in FY2025, with a focused view on liquidity management.”
Conclusion
RBI's decision to maintain the benchmark repo rate at 6.5% reflects its commitment to balancing economic stability with inflation control. Despite concerns over global geopolitical conflicts and supply chain disruptions, the RBI remains optimistic about India's economic trajectory, as evidenced by the upward revision of the GDP growth forecast for FY25 to 7.2%.
The central bank's emphasis on price stability underscores its cautious approach amid ongoing uncertainties. Additionally, measures to regulate unsecured loans and ensure fee disclosures aim to strengthen financial oversight.
Industry reactions to the decision vary, with some expressing support for stability in borrowing costs, while others lament the missed opportunity for rate cuts to stimulate sectors like real estate. Nonetheless, the overall sentiment appears optimistic, with expectations of sustained economic growth and market resilience.
Looking ahead, the RBI's continued focus on liquidity management suggests a proactive stance in navigating future challenges while maintaining a conducive environment for economic expansion.