RBI keeps Repo Rate unchanged at 4%

New Delhi: The RBI has kept the Repo Rate unchanged at 4 percent in its first review of the monetary policy in the ongoing fiscal. The Monetary Policy Committee (MPC) had decided to keep 'Accommodative' policy stance, RBI Governor Shaktikanta Das said today.

The central bank will keep an accommodative stance for as long as it is necessary to spur growth on a long term and durable basis, he said.

The Reverse Repo Rate too remained unchanged at 3.5 percent. The Marginal Standing Facility and bank rate also have been kept unchanged at 4.25 percent by the RBI.

Many financial experts had expected RBI to keep the key rates unchanged. 

This is the fifth consecutive PMC meeting when the rates have been kept unchanged. The central bank hopes the GDP Grwoth in the current fical will be 10.5 percent.

"The RBI’s approach, towards tackling the situation created by the pandemic and steps taken to help revive the economy, will go down in History as being one of the finest” said Kaushal Agarwal, Chairman of Mumbai-based The Guardians Real Estate Advisory. 

"With consumer inflation still trending at the upper end, the RBI intends to keep an eye on it in the coming months. India is witnessing its worst second wave of COVID-19, thereby raising some uncertainty. On a positive, the real GDP forecast for the FY 2021-22 remains strong at 10.5% in the wake of the vaccination drive that is in full swing in India" said Anuj Puri, Chairman, Anarock.  

"This is the first review of the monetary policy in the new fiscal year and it is likely that RBI will carefully monitor how the COVID-19 situation evolves and change its stance later in the financial year as the need arises," said  Dhruv Agarwala, Group CEO,  Housing.com, Makaan.com and Proptiger.com

"Demand for residential real estate has revived as homebuyers took advantage of the lowest mortgage rates along with realistic pricing and various freebies and options rendered by developers. Residential sales in Q1 (Jan-March) 2021 recovered to more than 90% of the volumes witnessed during pre-Covid times across the top 7 cities. The sustained growth in sales presents clear signs of demand and buyer confidence coming back to the market. The recent surge in the spread of the pandemic is likely to impact the home buying sentiment for a few months. However, we believe that overall residential sales are likely to surpass the pre-Covid levels in the coming quarters.” said Dr. Samantak Das, Chief Economist and Head of Research & REIS, JLL India.

"The RBI has maintained its accommodative stance until it sees an appropriate time to drive economic growth without jeopardizing its key goal of taming inflation. The recent increase in Covid 19 incidents, the Apex bank is faced with the challenging task of balancing inflationary pressures with the avoidance of a rise in borrowing costs. To keep inflationary pressures in check and sustain financial stability, we expect the central bank to pursue policy normalization in the second half of FY22," said Manoj Gaur, CMD, Gaurs Group.

"Although the repo rate has remained unchanged, we believe real estate would benefit from the Apex Bank's announcement of extending long-term repo operation (TLTRO) for six months to September 2021. We expect that as a result of this decision, the liquidity situation will improve and that NBFCs will provide financial support to the real estate sector. Due to a variety of factors, including low home loan interest rates, demand for real estate assets is already high, and we expect increased sales in the coming quarter," said Prasoon Chauhan, CEO, BlackOpal.

"The affordable housing market is already experiencing increased demand, and the RBI's new unchanged stance will have no impact on demand. Indeed, the RBI's growth projections will instill a sense of hope in the sector, which will translate into positive numbers for the real estate sector. If the economy recovers, which is likely after the RBI announced in the MPC review that it will maintain market liquidity and the job market remains active, then the buyer of affordable housing will expedite the process of property ownership. Right now, we understand the MPC's decision and hope that growth projections change, resulting in a flourishing real estate market," said Pradeep Aggarwal, Chairman, Signature Global Group. 

"We expected the RBI to make special announcements for the commercial sector that would stimulate investment. We understand the current situation, however, since the ability to lower the repo rate below 4% is restricted. The RBI permitted project loans for commercial real estate to be extended until the start of commercial operations in February 2020, which was the most recent significant announcement for the commercial segment (DCCO). The segment is in need of liquidity, which is also dependent on the status of priority lending, and we are hopeful that the segment will receive adequate liquidity now that the RBI has announced that TLTRO available to NBFCs is extended till September 2021," said Ashish Bhutani, MD, Bhutani Infra.