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RBI weighs in favour of sustainable economic growth, hikes rates to a 3-year-high of 5.9%, real estate industry reacts
New Delhi, October 4, 2022: RBI’s monetary policy committee (MPC), which determines interest rates, opted to raise the policy repo rate by 50 basis points to 5.9 per cent with immediate effect. This decision was taken after three days-long sessions that concluded on September 30. At the post-monetary policy press conference, the RBI governor said, […]
New Delhi, October 4, 2022: RBI’s monetary policy committee (MPC), which determines interest rates, opted to raise the policy repo rate by 50 basis points to 5.9 per cent with immediate effect. This decision was taken after three days-long sessions that concluded on September 30.
At the post-monetary policy press conference, the RBI governor said, “There are two components in the monetary policy framework – growth and inflation. MPC decisions are based on twin objectives, with primacy given to price stability.
RBI has also lowered its GDP growth forecast for the current financial year to 7 per cent from an earlier estimate of 7.2 per cent. Inflation has been a major concern and has been maintained at 6.7%. This is the fourth consecutive hike in repo rates, following the 40 basis points increase in May, and 50 basis points hike each in June and August. Analysts have voiced that there may be another hike in December. While these steps seem necessary but they may thwart the growth momentum, especially in the real estate sector.
Commenting on the current hike, Aditya Kushwaha, CEO and Director Axis Ecorp says, “In recent times, RBI has been adopting measures to curb inflation and ensure sustainable economic growth. Today’s announcement to increase the repo rate by 50 basis points is in line with this. However, it will have a cascading impact on the interest rates and MSMEs’ borrowing expenses will also swell. Despite the increase in the rates, the market sentiments in the real estate sector continue to be positive. We believe that the festive offers and discounts with help mitigate the impact of the current hike and are hoping that once the inflation is checked, these rates will be relooked at.”
