Monetary Policy Keeps Rates Unchanged: Reaction by Anuj Puri, ANAROCK Property Consultants
RBI panel announced no major changes during the monetary policy meeting today. Indian government has been taking steps to improve the economic environment in India and market participants are expecting a quick recovery from COVID-19 pandemic related economic troubles India is facing. As per estimates, Indian economy could bounce-back if the consumption grows. Reactions to monetary policy by Anuj Puri, Chairman - ANAROCK Property Consultants follow....
As expected, the repo rate and the reverse repo rates remained unchanged while maintaining an accommodative stance. With consumer inflation still trending at the upper end of the apex bank’s band, and the policy repo rate also being substantially reduced by 115 basis points since February 2020, RBI kept the rates on hold, with an eye on how the inflation and the economic recovery pans out in the coming months. Advance estimates indicate that the Indian economy may contract as much as 7.7% in FY2020-21 due to the pandemic.
In such a scenario, one would usually expect RBI to cut repo rates in order to boost consumption. Certainly, the real estate industry always aspires for reduced interest rates. Housing demand is reviving, and this demand needs to be fostered. However, the RBI's current stance is absolutely justified, given the unique circumstances. We are certain that rates will be adjusted favourably once the pandemic exigencies ease.