Bhoomika Singh
After multiple meetings of the Monetary Policy Committee (MPC), the RBI Governor announces to keep the repo rate under the liquidity adjustment facility (LAF) unchanged at 4 per cent, for the 11th time in a row. Keeping the marginal standing facility (MSF) rate and the Bank Rate unchanged at 4.25 per cent, the standing deposit facility (SDF) rate or reverse repo rate will be at 3.75 per cent, and it will be the floor for LAF from now.
“Further, it has been decided by the Reserve Bank to restore the width of the LAF corridor to 50 basis points, the position that prevailed before the pandemic. The floor of the corridor will now be provided by the newly instituted SDF, which will be placed 25 basis points below the repo rate, i.e., at 3.75 per cent,” Das said.
Speaking of the growth, Gov. Das said, According to the second advance estimates (SAE) released by the National Statistical Office (NSO) on February 28, 2022, real GDP rose by 8.9 per cent in 2021-22. However, the key drivers of domestic demand, Private consumption and fixed investment remain subdued, with these two components being only 1.2 per cent and 2.6 per cent respectively, above their pre-pandemic levels. On the supply side, contact-intensive services still trail the 2019-20 level. Nevertheless, the Indian economy is steadily reviving from its pandemic-induced contraction. Consequently, the projected GDP growth for 2022-23 has fallen to 7.2 per cent which was projected to 7.8 per cent earlier.
Sharing his views on RBI’s decision,
Well, inflation remains the issue of concern, as the Governor declared that the inflation remains growing forward with 4 per cent within a band of plus/minus 2 per cent. In fact, the inflation is now projected at 5.7 per cent in 2022-23, with Q1 at 6.3 per cent, Q2 at 5.8 per cent, Q3 at 5.4 per cent, and Q4 at 5.1 per cent.
Apparently, industry experts seem to be happy with RBI’s move to keep the repo rate unchanged. “This is positive news for the real-estate companies as there will not be any hike in home loan rates, currently home loan rates are in between 6.5 and 7 per cent, this is one of the lowest home loan rates in history. We continue with our buy call on Sobha Limited and Oberoi realty with a target price of 1050 and 1250 respectively,” says Yash Gupta, Equity Research Analyst, Angel One Ltd.
Similarly, the Founder & CEO of PropertyPistol.com, Ashish Narain Agarwal thinks that these moves come as a relief for the Indian economy as he expressed, “The real estate sector has received a major boost as there will be no change in the interest rates from banks. Homebuyers can rejoice as they can get home loans at lower and competitive rates. Buyers who were anticipating their decision can opt for buying property. With new residential projects, infrastructure developments taking place and stable repo rates, the real estate industry seems poised and is progressing further.”
Sharing her views on the monetary policy, Ridhima Kansal, Director, Rosemoore, feels that this step by RBI to keep the repo rate unchanged is a prudent initiative, as it will enable banks to continue offering credit at low rates, thereby helping retail consumption. “With receding cases, expansive vaccination drives, and a healthy economic outlook, India’s retail sector looks upbeat in FY 23. Meanwhile, the government should try to control inflation, because if not rein, it can soften demand,” Kansal said.
