RBI hikes the repo rate by 35 bps to 6.25 percent

Real estate experts expect that the repo rate hike, is the pressing need to clamp down inflation.

Mr. Rohan Pawar - CEO of Pinnacle Group

"The Monetary Policy Committee (MPC) of the RBI increased the repo rate by 35 basis points, bringing it up to 6.25 percent. This is part of an ongoing effort to bring under control the high level of retail (CPI) inflation, which is currently between 6 percent and 6.5 percent. In this cycle of rate increases, the repo rate has increased by 225 basis points (bps) after the most recent increase. Even though the projection for GDP has been scaled back, the central bank has signaled that it does not intend to hurt the growth sentiment by hiking interest rates too much.  In general, the increase in the repo rate represents measured steps that are commensurate with the changing economic conditions. The increase may have a temporary effect but will be of no influence on the housing market in the medium to long term as the demand for housing remains robust.”

Mr. Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani

"The rate hikes by RBI won't have a significant impact on the home buying sentiment. However, the central bank has been on a rate-hiking journey in order to tame the rising inflationary pressures. Understanding this, even homebuyers are aware of the fact that these rates were transient and unsustainable. They were expecting the hike and are thus prepared for it. Several banks have already started passing the burden to home loan borrowers. However, we have seen significant demand from homebuyers despite the increased interest rates. We expect the demand to sustain, considering the necessity to own a home is of profound importance today. 2022 has favored the luxury housing segment, the homebuyers deliberately grabbed the opportunity of festive offers and sealed the deal. Similarly, with the consumers being confident about the economy, the real estate sector will register a remarkable year end, setting an example for 2023."

Mr. Ravi Singhal, CEO, GCL

We expect crude to fall significantly from its recent high. If the government passes this on to consumers, we believe the RBI will pause in its next policy. We also believe that the market will remain neutral in the coming days and that it will set new highs in December.

Mr. Amit Gupta, MD, SAG Infotech

The RBI repo rate was raised by 35 basis points, which was expected, but the governor's tone was above average. Despite the lower GDP prediction, inflation remains stable. The market expects the governor to announce the end of the rate hiking cycle, but current policy shows no evidence of it. Nevertheless, the economy is not responding well to the programme. It might not be a financial event with significant intraday volatility.

According to the MPC, more targeted monetary policy intervention was required to anchor inflation expectations, break core inflation persistence, and manage second round impacts. Indian corporations are in better shape than ever before. The Indian economy is still strong. Our inflation rate remains high, as it is in the majority of the world.

Mr. Suren Goyal, Partner, RPS Group

The RBI’s recent stance to increase the repo rate to cut down on the rising inflation is a welcome step. The present rate of inflation has crossed 6.7 percent and it is essential for the RBI to take a strong stance for the wider well-being of the economy. Most of the major international central banks are undertaking similar steps. Although a surge in repo rates can weigh on purchasing power and personal loan growth, an overall healthy economic outlook will continue to cushion the markets. India’s GDP growth has been forecasted to be 7 percent in the current fiscal by Fitch, which makes it the fastest-growing emerging economy in the world. In a time when the world economy will register an average growth of 1.7 percent , India will remain one of its brightest spots.

Mr. Manoj Dalmia, Founder and Director, Proficient Equities Private Limited

The Reserve Bank of India’s (RBI) has hiked repo rate by 35 basis points (bps) to 6.25 percent with immediate effect.
The RBI policy rate is now at its highest level since August 2018. Standing Deposit Facility (SDF) rate is adjusted to 6.00 percent and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 percent. RBI’s GDP growth forecast for the current financial year (FY23) is seen at 6.8 percent. The growth has been reduced from RBI’s previous estimate of 7 percent. FY23 CPI estimate is at 6.7 percent and remains unchanged from the previous estimate of the central bank. RBI remains in contraction mode but is ready to step in to provide liquidity.

Nidhi Aggarwal, Founder, SpaceMantra

The realty sector in India will remain unperturbed by the current surge in repo rates. India continues to be one of the fastest-growing emerging economies in the world with an estimated rate of growth of 7 percent in the current fiscal. This further indicates that Indian markets are largely insulated from the muted global economic outlook. Although the growth will correct in the next fiscal, it will still be in the comfortable range of 6- 6.5 percent. Indian real estate will continue to be one of the key growth enablers and will play a pivotal role in employment generation in the country. The growth in the realty market won’t just be limited to metros but also to tier 2 and 3 cities and smaller townships reflecting a multifaceted nature of expansion, which is a positive sign in the longer run.

Kumar Saurav, Global Mobile Business Head,  Adcounty India

In a bid to curb the raging inflation, which has been over 6 percent for 10 consecutive months as of October 2022, the Reserve Bank of India hiked the repo rate by 35bps to 6.25 percent. Repo rate refers to the rate at which the central bank lends short-term funds to banks. The law dictates that the Monetary Policy Committee (MPC) maintains the inflation within the 2-6 percent band. The MPC stressed the removal of the accommodating approach, which shows that the trend primarily favours lowering interest rates. RBI Governor Shaktikanta Das remarked that corporates are in better shape than before, and the financial system is still solid and reliable. Additionally, he said that further calibrated monetary policy action is required since core inflation is demonstrating stickiness and that there is still an excess of liquidity in the banking system.

Ridhima Kansal, Director, Rosemoore

The rise in the repo rates has been on the expected lines, as there is a pressing need to clamp down on the rise in inflation. The rate of inflation reached 6.77 percent in October, sending signals to the higher authorities to take further prudent steps and rein in the rise. The rise in the repo rate will affect the purchasing appetite to some extent. However, the overall economy looks bullish and this is a positive sign. India has witnessed a reduction in the rate of unemployment and labor market looks bullish at the moment. This in conjunction with a healthy and upbeat economic growth forecast will continue to drive the retail market in India.