In the upcoming MPC meeting, we expect that the RBI will continue to maintain the policy repo rates. Consumer inflation, excluding food prices, is within the central bank's acceptable upper tolerance range and the fiscal consolidation plan outlined in the FY2024-25 budget, aiming to gradually reduce the fiscal deficit to 4.5% over the next two years, provides a buffer against potential inflationary pressures. This eases the RBI's stance on considering any interest rate hikes for the remainder of the year.
With the economic momentum holding steady, the RBI can consider maintaining the rates for now and remain open to pivot to rate cut as circumstances evolve later this year. Maintaining stability in interest rates is proving beneficial for the real estate market, particularly the residential sector.
Consumers have already factored in elevated interest rates and are still actively engaging in home purchases. However, the affordable housing segment is experiencing sluggish residential sales. Consequently, a well-timed rate cut could prove advantageous for this specific market segment, providing a potential boost to affordability and create a runway for future growth.
