June 7 2016, 12.54 PM IST || Pocket News Alert
Mr. Vineet Relia, Managing Director of SARE Homes
RBI Governor Raghuram Rajan’s decision to keep the repo rate unchanged at 6.5% is disappointing, though not unexpected. As the RBI had already announced a 25 basis point repo rate cut in its April policy review, and with retail inflation rising to 5.39% in April from 4.83% in March, expectations of a rate cut were extremely muted. Since retail inflation is expected to rise due to the rally in crude oil and other commodities prices and implementation of the 7th Pay Commission recommendations, it is clear the RBI is focussed on lowering retail inflation to 5% by March 2017. Nonetheless, since demand in real estate and allied industries remains sluggish, a rate cut could have improved liquidity and created renewed interest in property purchase. But with the RBI stating its monetary policy stance is “accommodative”, one is hopeful a rate cut may be in the offing in the latter half of 2016.