The central bank’s decision to keep the repo rate unchanged at its bi-monthly meeting on Friday may encourage potential buyers of homes, cars and durable products to take the sales plunge, executives at top companies said.
“Today’s RBI monetary policy announcement is a good boost to industry confidence. The upward revision of GDP growth rate, the holding of the repo rate and maintaining the inflation outlook will further reinforce confidence in the ecosystem for the year ahead,” Shashank Srivastava, senior executive officer, sales and marketing, Maruti Suzuki India, said.
According to the Federation of Automobile Dealers Associations (FADA), November saw the highest-ever vehicle sales in history of the Indian automotive industry. Customers across various segments and categories purchased a total of 28.54 lakh units, surpassing the previous record of 25.69 lakh units set in March 2020.
The same goes for consumer durables, which saw a good festive season this year. A stable interest rate environment would only aid the growth of the market further, said Eric Braganza, former president of the Consumer Electronics and Appliances Manufacturers Association (CEAMA).
“The move to keep the repo rate unchanged will spur demand,” Braganza said. “The economy is on a good growth trajectory. The festive season has been good for the consumer durables industry, especially, premium products. This momentum will continue into the next year,” he said.
The rate pause, said some experts, may help real estate developers plan their launches more confidently, as sentiment remains positive among consumers.
“If we consider the present trends, the housing market is on a bull run and unchanged home loan rates will only add to the overall positive consumer sentiment. Given that housing prices have escalated in the last one year, at least the unchanged home loan rates will give some relief to homebuyers,” Anuj Puri, chairman, Anarock Group, said.
“The stable interest rate outlook of the RBI will bode well for both residential and commercial real estate markets. The unchanged repo rate will enable individuals and businesses to purchase properties at a more affordable price, stimulating demand velocity,” Niranjan Hiranandani, founder & MD, Hiranandani Group and national chairman of NAREDCO, an industry body, said.
Essar MD & CEO Rajiv Agarwal said that the RBI’s decision to keep the repo rate unchanged at 6.50% was cautious in keeping with the fragile global economic environment and inflation being above the central bank’s comfort level of 4%.
“With the taming of inflation, we expect a reduction in the interest rates in the coming quarters,” Agarwal said.
Unmesh Kulkarni, MD and senior advisor, Julius Baer India, a wealth management firm, said that the RBI would likely use its liquidity management tools to keep inflation under check than hike the repo rate any time soon.
“Given the continued concerns and focus around inflation, we are unlikely to see any reversal in policy rates anytime soon, at least till mid-2024,” he said.
Source: The Financial Express