RBI's Balanced Act: Steady Interest Rates to Tame Inflation and Boost Growth
The Reserve Bank of India's decision to maintain the status quo on interest rates is a strategic move to control inflation and promote economic growth.
RbiInterest RatesInflationEconomic GrowthReal EstateReal Estate PuneAug 09, 2024
Experts, including Madan Sabnavis, Chief Economist at Bank of Baroda, noted that the RBI's clear focus is on headline inflation, including persistent food inflation. Any future rate cuts will be data-driven and are unlikely before December.
Industry bodies like Assocham have welcomed the RBI's decision, citing robust GDP prospects of 7.2% in 2024-25, providing room to focus on inflation control for economic stability. PHD Chamber of Commerce and Industry's President Sanjeev Agrawal also appreciated the RBI's steady stance amidst ongoing geopolitical crises and strong macroeconomic fundamentals.
Ranen Banerjee, economic advisory leader at PwC India, added that the pause in policy rate was expected, noting no urgent need for action given softened yields on 10-year paper and volatile food prices. Other experts stressed the importance of inflation deceleration amid steady growth.
The RBI's announcement also included measures to expedite cheque clearance and improve borrower credit profile reporting. Angad Bedi of BCD Group and Adhil Shetty of BankBazaar.com lauded the stability this brings to borrowing costs and digital lending legitimacy, respectively.
The real estate sector is poised to benefit from stable loan rates. Overall, the RBI's decision is viewed as fostering a balanced approach to growth and inflation control, benefiting multiple sectors, particularly real estate, in the latter part of 2024.
About Bank of Baroda
Bank of Baroda is an Indian state-owned banking and financial services company headquartered in Vadodara, Gujarat, India.
About PwC India
PwC India is a part of the global PwC network, providing industry-focused assurance, advisory, and tax services to enhance value for clients.
About Assocham
Assocham is one of the leading industry associations in India, promoting the interests of the Indian industry.
About PHD Chamber of Commerce and Industry
PHD Chamber of Commerce and Industry is a national apex chamber, working for the promotion of Indian industry and trade.
About BCD Group
BCD Group is a leading real estate development company in India.
About BankBazaar.com
BankBazaar.com is a leading online marketplace for financial products and services in India.
Frequently Asked Questions
What is the current repo rate set by the RBI?
The current repo rate is 6.5 per cent.
Why has the RBI maintained the status quo on interest rates?
The RBI has maintained the status quo to focus on moderating inflation and promote economic growth.
How will the real estate sector be affected by the RBI's decision?
The real estate sector is poised to benefit from stable loan rates.
What measures has the RBI announced to improve the financial system?
The RBI has announced measures to expedite cheque clearance and improve borrower credit profile reporting.
Who has welcomed the RBI's decision?
Industry bodies like Assocham and PHD Chamber of Commerce and Industry have welcomed the RBI's decision.
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