With a ‘normal’ monsoon on the cards – going by the Met Bureau – this Tuesday (June 7) when the RBI is scheduled to hold its bi-monetary policy review, we may still not see the RBI Governor Raghuram Rajan making any ‘big bang’ announcements, said Niranjan Hiranandani, MD, Hiranandani Communities. “Market Pundits say there is scope for a marginal reduction in rates; but the RBI Governor will in all probability, wait and watch how the monsoon behaves in the first two months. In the next bi-monthly review in August, we may see him dropping the rates by 25 bps or thereabouts,” he added.
The last rate cut was in April this year, when the RBI Governor cut the repo rate by 25 bps to 6.50 per cent. The CRR was kept unchanged at 4 per cent.
“From a real estate perspective, if the RBI opts to cut the rates, this move has the potential to reduce the overall burden for home buyers; and can potentially, boost real estate sales by enhancing positive sentiment for home seekers,” pointed out Niranjan Hiranandani.
Apart from a good monsoon, the RBI Governor is keeping watch on transmission of rate cuts to end users, he added.
“From a home buyer’s perspective, significant rate transmissions by banks and HFIs will enhance positive sentiment in the next few months. The last time the RBI Governor cut key rates, he specifically mentioned the need for banks to pass on the rate cuts to customers,” said Niranjan Hiranandani. “Post the Budget, we are seeing monetary policy being supportive of economic growth. Declining inflation and negative industrial outlook seem to have strengthened the case for the rate cut, although market expectations are that this Tuesday, the RBI Governor in all probability, will maintain ‘status quo’,” he concluded.
~ Niranjan Hiranandani is Founder & MD, Hiranandani Group, his recent initiative is Hiranandani Communities. He is the Founder and First President (Maharashtra), National Real Estate Development Council (NAREDCO), which works under the aegis of Ministry of Housing & Urban Poverty Alleviation, Government of India.