New Delhi: Despite US President Donald Trump’s unreasonable tariffs for India, it seems acche din have arrived for Indians, considering the rare, once-in-a-decade deflation witnessed since October. The Reserve Bank of India’s Monetary Policy Committee (MPC) has decided to cut the repo rate from 5.5 percent to 5.25 percent following its meeting on December 5.
Besides this, the MPC has also lowered the Standard Deposit Facility (SDF) to 5% and Marginal Standing Facility (MSF) to 5.5%, making it cheaper for banks to lend more, and helping boost consumption in the economy. The MPC has also decided to conduct forex swaps and buy bonds worth Rs.1 lakh crore to boost liquidity in the market through Open market Operations (OMO) auctions.
Considering the favourable economic conditions, the RBI has raised the Gross Domestic Product (GDP) forecast from 6.8% to 7.3% this year. For the July-September quarter, the GDP growth has increased to 8.2% from 7.8% from the previous quarter, thanks to strong manufacturing and services growth, official data shows.
Industry leaders cheer
Following the news, industry leaders, especially those in the real estate sector, have expressed confidence in an increase in demand.
“The RBI’s decision to reduce the repo rate by 25 basis points comes at a perfect time for the industry and reinforces India’s Goldilocks moment of low inflation and strong growth. A lower interest rate regime will provide much-needed momentum to housing demand, especially in the mid-income and premium categories where sentiment has remained strong. With inflation stabilising and GDP growth accelerating, this policy move will not only improve homebuyer affordability but also support developers by reducing overall borrowing costs” Mr. Prashant Sharma, President of NAREDCO Maharashtra said.
These lower rates are expected to encourage prospective home buyers waiting for a better deal.
“With demand already buoyant and inflation at near-zero levels, this decision will lend additional stability and stimulate fresh investment into both residential and commercial real estate. Home loan EMIs are likely to see marginal improvement, which will further strengthen buyer confidence,” Mr. Kaushal Agarwal, Chairman, at The Guardians Real Estate Advisory, added.
