Rate-cut will boost consumption
RBI is expected to cut the repo rate by 25 basis points for the third time to support growth amid low inflation and global uncertainties. This move may boost homebuyer sentiment and private investments in India’s slowing economy.
Rate-cut will boost consumption
Mumbai, June 05
Reserve Bank of India (RBI) is expected to lower the repo rate by 25 basis points for the third consecutive time to boost consumption as inflation continues to remain below the 4 per cent target range.
It is also anticipated to maintain an ‘accommodative’ monetary policy stance to support growth amid global uncertainties triggered by US tariffs and geopolitical frictions.
Talking to Bizz Buzz, Suvodeep Rakshit, Chief Economist, Kotak Institutional Equities says, “We expect the RBI to reduce repo rate by 25 bps in the upcoming June policy.”
The RBI MPC will have the comfort of benign inflation to continue focusing on supporting growth. We believe the RBI will reduce its FY26 CPI inflation by 20-30 bps to 3.7-3.8 per cent for FY26 while maintaining GDP growth at 6.5 per cent, he said.
Vimal Nadar, National Director and Head of Research, Colliers India says, “We expect the RBI to continue its growth-supportive stance and further rationalize the repo rate.”
A third consecutive reduction in benchmark lending rates can spur homebuyers’ sentiment and resultantly improve housing demand particularly in affordable and middle-income segments. For developers too, the rate cut could aid in gradual inventory clearance and offer financial relief by lowering of borrowing costs.”
Despite India’s economy growing by a robust 7.4 per cent in the January–March 2025 quarter — exceeding expectations — the full-year growth for FY 2025 is has slowed to 6.5 per cent, marking the weakest pace since the pandemic. With inflation well within control, now hovering near 3 per cent, this is an opportune moment for the central bank to take some bold steps.
Piyush Bothra, Co-Founder and CFO, Square Yards says, “A significant rate cut is not just desirable but necessary to revive the animal spirits and boost private investments, which have been quite sluggish.”
The real estate sector mirrors the broader economic trend, with growth moderating after a strong post-pandemic rebound. A meaningful reduction in the repo rate could be the catalyst the property market needs. To put it in perspective, even a 1 per cent reduction in interest rates can increase a homebuyer’s purchasing power by nearly 10 per cent, turning the dream of owning a house into reality for a larger population.
EoM.
