Another RBI Rate Cut To Spark Affordable RE Push

New Delhi: As the Reserve Bank of India (RBI) prepares for its monetary policy committee (MPC) meeting this week, industry experts said on Tuesday that the transmission of rate cuts into lower borrowing costs is vital to sustain residential real estate demand — particularly in the affordable housing segment, which is sensitive to interest rate movements.

Given the prevailing benign inflation environment and the GDP growth of 6.5 per cent recorded in FY2025, the Reserve Bank is likely to proceed with a 25-bps repo rate cut this Friday (June 6).

“The case for a rate cut is further supported by the revival in the liquidity conditions to a surplus of Rs3.6 lakh crore, which enhances the effectiveness of monetary transmission. Additionally, the softening of G-sec yields reflects bond market confidence in the RBI’s inflation and liquidity management and strengthens the rationale for easing rates,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India. With the anticipated rate cut, the cumulative reduction in the policy rate in this cycle would be 75 bps.

However, the focus must now shift to the pace and breadth of transmission.