RBI MPC Meeting: Central Bank Holds Repo Rate At 6.5%; Home, Auto EMIs To Remain Unchanged

RBI MPC Meeting: The RBI expresses worries regarding food inflation, particularly in light of the IMD’s forecast of above-normal maximum temperatures from April to June

The consistent holding of key policy rates by the RBI suggests that the EMIs on home and auto loans are expected to remain stable in the near future.

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The Reserve Bank of India (RBI) on Friday maintained the benchmark interest rates at 6.5 per cent, marking the seventh consecutive time the rates have remained unchanged. This decision comes as the RBI expresses worries regarding food inflation, particularly in light of the IMD’s forecast of above-normal maximum temperatures from April to June.

The consistent holding of key policy rates by the RBI suggests that the Equated Monthly Instalments (EMIs) on home and auto loans are expected to remain stable in the near future. Notably, the central bank has refrained from adjusting interest rates since February 2023. During the unveiling of the first bi-monthly monetary policy for the current financial year, the RBI reiterated its growth and inflation forecasts for the fiscal year at 7 per cent and 4.5 per cent, respectively.

RBI Governor Shaktikanta Das said, "After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, it (MPC) decided by a 5 to 1 majority to keep the policy repo rate unchanged at 6.50 per cent."

Regarding inflation concerns, Das highlighted uncertainties in food prices and the tight demand-supply situation in pulses and key vegetables, especially given the forecast of above-normal temperatures in the coming months.

Anuj Puri, chairman of Anarock Group, said, "Aptly and as expected, the RBI has kept the repo rates unchanged at 6.5 Per cent. The Indian economy is going strong and inflation is reined in, though it has yet to come within the threshold of RBI’s target. The decision to maintain status quo will keep the ongoing residential real estate sales momentum on course and unimpeded. Aspiring homebuyers eyeing a purchase will proceed with confidence."

Puri said that housing sales across the top 7 cities have been phenomenal in the past few quarters, even though prices are rising steadily.

"We saw total housing sales of over 1.30 lakh units across the top 7 cities in Q1 2024, the highest quarterly sales in the last decade. Average residential prices across these cities have seen a significant jump in the last one year – ranging between 10-32 per cent in Q12024 when compared to Q12023. Thus, the breather which RBI's unchanged repo rate will provide to home loan borrowers is apt and welcome," Puri added.