The RBI's freeze on lending rates but experts are still concerned about inflation.
By Bricksnwall | 2023-12-08
According to real estate analysts, the residential market had record
sales from January to September, with sales hitting a 15-year high. The Reserve
Bank of India's decision to maintain stable lending rates has been commended by
real estate experts, who point out the favourable effects on affordability and
demand. Experts noted that there are still certain worries about possible
inflationary pressures in the upcoming months. The nation's robust economic
development was highlighted by Samantak Das, Chief Economist and Head of
Research and REIS (India), JLL, who pointed out that the RBI revised its GDP
prediction upward to 7%.
He underlined that
the home sector saw record sales, with sales from January to September hitting
a 15-year high. The Reserve Bank of India's decision to maintain stable lending
rates has been commended by real estate experts, who point out the favourable
effects on affordability and demand. Experts noted that there are still certain
worries about possible inflationary pressures in the upcoming months.
The RBI revised its
GDP prediction to 7%, indicating the country's robust economic growth,
according to Samantak Das, Chief Economist and Head of Research and REIS
(India), JLL. He underlined the record sales in the residential market, which
saw sales hit a 15-year high between January and September.
Das stated that a
reduction in the repo rate in 2024 is expected to be supported by strong
macroeconomic fundamentals and some normalcy in the world economy the following
year. He was certain that the momentum in the home sector will continue to be
supported by stable interest rates.
Partner at Grant
Thornton Bharat Niladri Bhattacharjee recognised that the rapid growth rate
could lead to inflationary pressures, which would affect industries like mining
and metals. While acknowledging that keeping tariffs in place benefits the
business in the near term, Bhattacharjee cautioned that inflation is still a
long-term worry. The president of CREDAI-West Bengal, Sushil Mohta, praised the
stable repo rate and noted how it will benefit homeowners by preventing further
pressure on mortgage rates. He acknowledged the difficulties the housing
industry had suffered as a result of earlier rate increases and expressed
optimism that the industry will continue to benefit from a future repo rate
long-term effects will depend on the RBI's capacity to strike a careful balance
between promoting economic expansion and reining in inflation. Chief Economist
and Head of Research at Bandhan Bank Siddhartha Sanyal stated: "The story
on growth and inflation dynamics was a realistic and balanced one. The RBI's
revised growth projections are encouraging, especially in light of the
increased confidence in the ongoing broadening of the domestic growth momentum.
open to all options for managing liquidity when needed. The central bank's
intention to continue being proactive in identifying and reducing brewing risks
on all fronts is further demonstrated by the announcement from today."
According to Equirus economist Anitha Rangan, the RBI is holding onto its repo
rate at 6.5% with a vote in favour.
The growth forecast
revision for FY 24 to 7% from 6.5% was, according to Rangan, the major surprise.
"The RBI hasn't
lowered its inflation projection. This indicates, she said, that the RBI is
confident that growth is driven by genuine demand rather than inflation at the
current policy rate.
The founder and
director of Credit Wise Capital, Aalesh Avlani, stated that the stable repo
rate is a good development for the credit sector of India, especially for rural
clients who may now borrow with greater freedom.
This was evident over the most recent holiday season, when car sales hit all-time highs, partly as a result of stable interest rates and lenders passing the savings along to consumers.