Analysts Welcome RBI’s Decision To Keep Rates Unchanged, Give Healthy Outlook For Markets

Akhil Mittal, senior fund manager, Tata Asset Management, noted that the RBI seems to be committed to achieving inflation target while keeping a close watch on global financial market conditions.

Anuj Puri, Anarock Group Chairman, said the housing market is experiencing a ‘bull run’ and keeping the home loan rates unchanged would help add to consumer confidence and positive sentiments. ( Image Source :Getty )

The RBI’s Monetary Policy Committee on Friday announced after its bi-monthly review meeting that it has decided to keep the repo rates unchanged at 6.5 per cent. This marked the fifth consecutive time the regulator has maintained the pause on increasing the rates. Analysts lauded the regulator’s decision and said that it would help maintain the growth momentum in the market. 

Akhil Mittal, senior fund manager, Tata Asset Management, said that the RBI’s decision came in line with the market expectations. “As expected, policy was a non-event with no change in rates or stance. Strong growth trend domestically and falling inflation have both been highlighted. Liquidity condition developments remain aligned with policy stance and hence no OMO sales were required (as mentioned in previous policy). RBI seems to be committed to achieving inflation target while keeping a close watch on global financial market conditions,” he added. 

Giving an outlook for the market, Mittal stated that with the monetary policy keeping in line with the market expectations, “We expect markets to perform better and yields to come-off 5-10 bps across the curve. Overall, at the margin, policy seems to be positive for markets.”

RBI Decision Helpful For Housing Market

Another analyst, Anuj Puri, Chairman, Anarock Group, noted that the regulator opted to keep the rates unchanged in light of the recent growth shown by the Indian economy and its strong GDP numbers for the second quarter of the current fiscal year, beating expectations. Notably, India logged a real GDP growth rate of 7.6 per cent in the quarter ended September 2023. 

Commenting about the impact of this decision on the housing market, Puri said, “This is an extension of the festive bonanza that RBI gave to the homebuyers in its last policy announcement. It gives homebuyers yet another opportunity to make cost-optimized home purchases.”

Puri maintained that currently, the housing market is experiencing a ‘bull run’ and keeping the home loan rates unchanged would help add to consumer confidence and positive sentiments. Further, he said that the housing prices surged across the top seven cities in the last one year, and the unchanged home loan rates would help provide some relief to the consumers. 

According to Anarock Research, average housing prices increased between 8-18 per cent across India’s top seven cities in the last one year. Out of this, Hyderabad saw the prices surge by 18 per cent, the highest amongst all. The average prices in these cities today stand at nearly Rs 6,800 per square feet, while a year ago, these prices were Rs 6,105 per square feet. This marks an increase of 11 per cent collectively in the top seven cities. 

Providing an outlook for the housing market, Puri noted, “Going forward, we may expect the momentum in housing sales to continue in the wake of the unchanged repo rates coupled with the resultant stable home loan rates and positive economic outlook on India.”