Pause Button Or Rate Cut – Wait & See
BizNewsConnect presents some expectations from a cross section.
MUMBAI, June 7 (The CONNECT) – The RBI’s Monetary Policy Committee (MPC), which began its three-day meeting yesterday will announce the policy decisions tomorrow.
BizNewsConnect presents some expectations from a cross section.
Parag Sharma, Whole-time Director & Chief Financial Officer, Shriram Finance: With the customer inflation level at 4.7%, well below RBI’s upper tolerance limit of 6%, the conditions seem favourable for a pause in rate hikes. The latest GDP forecasts also point towards inflation becoming less of a concern. Accordingly, we expect that the MPC, in its upcoming meeting, will hit the pause button on the policy rate hikes, for the second time running. However, accurately forecasting the potential impact of El Nino on the economy has become the primary concern. Considering our economy’s heavy dependence on farmers and small businesses, we feel that the Government would do well to take steps to mitigate the adverse effects of El Nino.”
Vimal Nadar- Head of Research at Colliers India: RBI is likely to remain focused on withdrawal of accommodation and keep the repo rate unchanged at 6.5%, in a bid to progressively align inflation within its target while maintaining growth. Consumer price index (CPI) eased to an 18-month low at 4.7% during April 2023 led by monetary policy tightening measures undertaken during 2022, however the high frequency indicators will be closely watched in the current volatile global environment.
At 7.2% for FY 2022-23, India’s GDP has outperformed the market expectations and is a testament to the promising trajectory of the economy amidst global challenges. Indian economy continues to be resilient, with GDP growth pegged at 6.5% for 2023-24, aided by strong domestic demand and scaling up of capital investment.
A stable repo rate will avert the streak of rising home loan interest rates and will aid fence sitters & prospective homebuyers to expedite homebuying decision.
Pradeep Aggarwal, Founder & Chairman, Signature Global (India) Ltd: Our expectation from the upcoming RBI policy is that they will most likely maintain the status quo. However, if there is an opportunity, we believe the apex bank should consider announcing a cut in policy rates, even if it is a small one. This could have a positive impact on consumer sentiment, benefiting the interest-sensitive real estate sector. Of course, it is essential for the government to ensure that any rate cut is effectively passed down to the consumers, ensuring the desired impact on the industry.
V Swaminathan, Executive Chairman, Andromeda loans and Apnapaisa.com: Given the current circumstances, our expectation from the RBI is to refrain from raising policy rates, as it may negatively affect loan demand. We believe that, if not a cut, maintaining stable interest rates would be advantageous in supporting ongoing economic growth and fostering a conducive lending environment.
