TLI Staff
New Delhi: With no major push for real estate sector in the Union budget and lower inflation forecast, Reserve Bank of India (RBI) could have avoided the increase in policy repo rate, Gaurs Group CMD Manoj Gaur said on Wednesday reacting to RBI’s monetary policy.
“However we hope because of high market sentiment the affect could be nullified,” he added.
As widely expected, the RBI on Wednesday raised policy repo rate by another 25 basis points (0.25%) to 6.50% to contain inflation. The increase in repo rate is set to push EMIs up for various loans such as car loan, home loan and personal loan.
The Monetary Policy Committee (MPC) chaired by RBI Governor Shaktikanta Das also decided by a majority of 4 out of 6 members to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth.
This is the sixth repo rate hike by the RBI in the current financial year to control inflation.
Repo rate is the interest rate RBI charges banks for borrowing cash. If RBI raises the repo rate, banks increase their lending rate for borrowers.
“Coupled with the tapering inflation and the projected GDP growth for the current financial year, the sector should easily absorb the impact. However, this is the sixth straight hike taking the total quantum to 6.5%, the highest in four years,” said Sanjay Sharma, Director, SKA Group.
Commenting on monetary policy, Sumit Agarwal, Director, Sales & Marketing, Grandthum said that the repo rate hike may afflict retail sales for a brief period due to an imminent hike in retail loans.
“But the overall macro-functioning and demand will not face a downturn. In fact, the GDP growth of the country is projected at 6.5% for 2023-24, and the real estate sector will expand its share in India’s GDP based on the growing demand,” he said.