The latest announcement has received applaud from India Inc, the middle class, farmers and the non-banking financial sector.
The RBI, on Thursday, gave a big surprise by slashing the basis points repo rate to 25. It also changed the monetary policy stance to ‘neutral’ from the earlier stance of ‘calibrated tightening’.
Experts’ view on RBI policy:
Jayant Manglik, President, Religare Broking Ltd
The RBI cut the repo rate by 25bps to 6.25 percent along expected lines. The Monetary Policy stance has also been softened to ‘neutral’ from ‘calibrated tightening’. Falling inflation and the volatile IIP growth had raised the probability of these materialising. Notably, the RBI has revised the inflation forecast also downward. In this policy, with inflation already under control, the RBI has now favoured growth, even as the concerns with respect to the fiscal deficit miss and volatile global crude oil prices continue to linger.
Rushabh Maru – Research Analyst, Anand Rathi Shares and Stock
As the inflation remains favourable, the RBI has cut repo rate which market was not expecting and thus the rupee appreciated. However this is a temporary phenomenon. Globally crude oil prices are rising gradually and is a matter of concern for the markets. Trade tension and geopolitical matters also remain cause of worry. Hence we expect the rupee to trade in 71-72 range in the near term with the currency continuing it’s depreciation bias.
Sujan Hajra, Chief Economist, Anand Rathi Financial Services
The change in policy stance and rate cut are in line with expectations. We expect another 50 bps cut in 2019. We expect this to be positive for the debt market with RBI’s guidance of continued OMO. Deposit and lending rates, however, may not correct immediately and commensurately as deposit growth rate is lagging credit growth by 500 bps.
Prasoon Chauhan, CEO, HomeKraft, an ATS company
After the boost given to the realty sector in the budget, this 25 bps cut will provide the right platform for the housing demand to go up, especially in the mid-income and affordable housing segment across cities as home loan interest rates further fall. We have already started to see huge growth of new enquiries for projects with attractive interest rates and subsidies, which will now continue to 2019-20. Now, homebuyers have lot of benefits to finally close their home purchases.
Shishir Baijal, Chairman & Managing Director, Knight Frank
The reduction in REPO and Reverse REPO rates by the RBI by 25 BPS is a welcome move, which we hope will provide a further fillip to the demand side for real estate. As a result of this reduction, we hope that banks will pass on the benefits of the revised rates to the end consumer of loans, thereby making it easier for them to make their purchase decision. For a sector which has been suffering from poor end user demand for some time now, this is a step in the right direction.