Reserve Bank of India Monetary Policy 2024: Reserve Bank of India Governor Shaktikanta Das on Thursday announced the bi-monthly Monetary Policy Committee (MPC) decision as key interest rates are expected to remain on hold as inflation remains close to the 6 per cent ceiling.

Announcing the decision, Governor Das said that the Reserve Bank of India has decided to maintain the status quo of the key lending rate or repo rate at 6.5%.

Impact on the housing sector

Anarock Group Chairman Anuj Puri said: “Despite global headwinds and inflation being well controlled, the fundamentals of the Indian economy remain strong and the Reserve Bank of India has once again decided to keep the repo rate unchanged at 6.5%, Thus extending the festive feast which it has extended to homebuyers in the last two policy announcements. As a result, homebuyers have retained the advantage of relatively affordable home loan rates.”

real estate market trends

Puri added that if we consider the current trends, the real estate market is unstoppable and unchanged home loan rates will help sustain the overall positive consumer sentiment.

“Given the rise in house prices in seven major cities over the past year, this respite from the RBI is a clear advantage for homebuyers.”

According to Anarock Research, average house prices in the top seven cities will increase by 10-24% in 2023, with Hyderabad recording the highest increase of 24%. The average price in these markets is approx. 7,080 per sq. ft. compared to approximately Rs. 7,080 per sq. ft. in 2022. Rs 6,150 per sq ft – a collective increase of 15%.

Puri added: “Going forward, we expect the home sales momentum to continue, largely driven by unchanged repo rates, which will keep home loan rates attractive and also indicate India’s positive economy The outlook continues to be strong.”

Repo rate trends

The Reserve Bank has held the short-term lending rate, or repo rate, steady at 6.5% for a year.

The benchmark interest rate was last raised in February 2023 from 6.25% to 6.5% to curb inflation driven mainly by global developments.

The Monetary Policy Committee is responsible for deciding the policy repo rate to achieve the inflation target, taking into account the growth target.

At its off-cycle meeting in May 2022, the Monetary Policy Committee raised the policy rate by 40 basis points, followed by hikes of varying magnitudes in each of the five meetings until February 2023. The repo rate was increased by 250 basis points cumulatively between May 2022 and February 2023.

The Monetary Policy Committee consists of three external members and three RBI officials.

External members of the team include Shashanka Bhide, Ashima Goyal and Jayanth R Varma. Apart from Governor Das, other RBI officials on the Monetary Policy Committee include Rajiv Ranjan (Executive Director) and Michael Debbrata Patra (Deputy Governor).