RBI Holds Steady: A Balanced Stance on Inflation and Growth

The Reserve Bank of India (RBI) has opted to maintain the repo rate at 6.5% for the ninth consecutive time. Industry experts highlight that the decision allows the RBI to continue focusing on moderating inflation for sustained economic growth. Key stakeholders believe this approach will benefit various sectors, including real estate.

The Reserve Bank of India's decision to keep the interest rate unchanged will provide it an elbow room to continue focusing on moderating inflation, which is crucial for resilient and sustained economic growth, said industry experts.

Marking the ninth consecutive time, the central bank has decided to maintain the status quo, keeping the benchmark repo rate at 6.5 per cent.

Experts, including Madan Sabnavis, Chief Economist at Bank of Baroda, noted that the RBI's clear focus is on headline inflation, including persistent food inflation. Any future rate cuts will be data-driven and are unlikely before December.

Industry bodies like Assocham welcome the RBI's decision, citing robust GDP prospects of 7.2% in 2024-25, providing room to focus on inflation control for economic stability. PHD Chamber of Commerce and Industry's President Sanjeev Agrawal also appreciated the RBI’s steady stance amidst ongoing geopolitical crises and strong macroeconomic fundamentals.

Ranen Banerjee, economic advisory leader at PwC India, added that the pause in policy rate was expected, noting no urgent need for action given softened yields on 10-year paper and volatile food prices. Other experts stressed the importance of inflation deceleration amid steady growth.

The RBI's announcement included measures to expedite cheque clearance and improve borrower credit profile reporting. Angad Bedi of BCD Group and Adhil Shetty of BankBazaar.com lauded the stability this brings to borrowing costs and digital lending legitimacy, respectively. The real estate sector is poised to benefit from stable loan rates.

Overall, the RBI’s decision is viewed as fostering a balanced approach to growth and inflation control, benefiting multiple sectors, particularly real estate, in the latter part of 2024.