Wait for another repo rate hikes by 25 & 35 bps
Even as RBI has increased repo rate by 50 basis points to 4.9 per cent this morning, experts believe that more such rate hikes were in the offing.
Mumbai, June 08 Even as RBI has increased repo rate by 50 basis points to 4.9 per cent this morning, experts believe that more such rate hikes were in the offing.
Aditi Nayar, chief economist, ICRA said, "While further rate hikes remain clearly on the table, with the reference to the revised repo rate of 4.9 per cents remaining below the pre-pandemic level, the comment on the orderly completion of the government borrowing programme has served to cool the 10-year G-sec yield.'
According to Nayar, "We foresee further repo hikes of 35 bps and 25 bps, respectively, in the next two policies. However, the upmarch in the yields will now be somewhat shallower than our earlier expectations."
Ramesh Nair, CEO, India and MD, Market Development, Asia, Colliers, said, "On expected lines, RBI hiked repo rate by a further 50 bps to 4.9 per cent while continuing to move away from its accommodative stance. The hovering inflationary concerns amidst the resilient domestic economy supports this RBI's aggressive move. Despite the challenging global environment, Indian economy is strongly placed and on the path to recovery and GDP growth is pegged at 7.2 per cent for FY 2022-23.
On a cumulative basis, this translates into an almost percentage point increase in repo rate in the last 1 month. However, it remains lower than the pre-pandemic level of 5.15 per cent.
We expect banks to gradually pass on this rise in the form of higher home loan rates in the coming months. An opportune time for homebuyers to take advantage of the prevailing home loan rates at a time when prices are also expected to rise in most of the markets led by revival in demand, he added.
RBI decision to hike the policy rates is on the expected lines. With inflation lingering obstinately high, RBI had little choice.
Amit Goyal, CEO, India Sotheby's International Realty, said, "We hope the hike in repo rate would rein in rising commodity prices and ensure sustainable growth in the long term. At the same time, we don't see any major impact of the demand side in the housing market, which continues to remain strong."
We are hopeful with the supply side measures taken by the government, inflation will cool down by the year-end, and the central bank will revert to a lower interest rate regime, he added.
