Industry experts anticipate that the RBI will maintain rate stability, offering promising prospects for borrowers, particularly those contemplating home loans.
RBI’s Monetary Policy Committee has kickstarted its 3-day meeting and is expected to keep key rates on hold when it announces its decision on Friday but the recent uptick in oil prices and sustained economic growth are likely to keep its focus on inflation.
Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities expects, “Global and domestic risks have increased from the August policy. Rising crude oil prices and dollar are having an impact on the depreciating INR. With major developed market central banks seem to be setting up for a long pause at elevated policy rates, the Reserve Bank of India (RBI) has very little space to sound dovish. The RBI will maintain policy rate at 6.5% while aiming to keep liquidity tight.”
Meanwhile Kaushik Mehta, Founder & CEO of RUloans Distribution pointed out that the “forthcoming monetary policy meeting unfolds against a backdrop of cautious optimism. We anticipate the RBI will maintain rate stability, offering promising prospects for borrowers, particularly those contemplating home loans. The trajectory of the home loan market in the forthcoming year hinges on economic dynamics and consumer sentiment. If rate stability persists and the economy maintains its positive momentum, we may witness a surge in home loan applications, especially towards year-end, further fueled by the festive season. Diligent monitoring of economic indicators and central bank actions remains vital for both borrowers and lenders. Similarly, this stable rate environment is poised to invigorate not only the car loan market but also the broader finance and loan sectors. Consumers feel secure financing their vehicle purchases, and we can anticipate a rise in car loan applications, buoyed by favorable lending conditions and heightened demand during the festive season.”
CareEdge report added that the potential risks to economic growth have heightened since the last policy, owing to a combination of both domestic and global challenges. “Despite the persistent rise in inflation, primarily driven by the volatility in food prices, there are initial signs of a slowdown in food inflation. Meanwhile, core inflation remains relatively stable, with some easing observed in August. Liquidity conditions have tightened, and borrowing costs remain elevated. Given the current circumstances, the RBI is likely to prioritise supporting economic growth, especially during the festive season, while remaining cautious on inflation. Therefore, we anticipate that the RBI will keep its policy rates unchanged, with a unanimous decision, while adhering to its stance of ‘withdrawal of accommodation.’ We do not anticipate any further rate hikes by the RBI in this fiscal year. The MPC is expected to consider rate cuts after the first quarter of the upcoming fiscal year.”
Source:financialexpress.com