Rate cut was currently needed in order to boost liquidity: Parth Mehta, Managing Director, Paradigm Realty
The MPC (Monetary Policy Committee) statement of having a 25bps cut is something the industry was expecting and which was currently needed in order to boost liquidity and investment cycles as few data points like IIP and car sales numbers which came out recently have been timid. One of the major reasons RBI could give a go-ahead to the cut was majorly because the Inflation was in check giving them headroom to accommodate cut. This rate cut shall help the borrowing rates related to construction finance getting lowered, as well as the home loan rates easing out bringing back interest levels in property buyers with already lowered GST as buying sentiment booster. We also believe that if the inflation continues to be stable then we can expect another rate cut in the next MPC meeting to revive consumer spending and restore economic growth.
Inflation and growth prints were lower than earlier expectations: Kunal Shah, Kotak Mahindra Life Insurance
MPC members have decided to cut repo rate by 25bps to 6% (4-2) (as expected by market participants) as inflation and growth prints were lower than earlier expectations. MPC maintained the stance as neutral (5-1) with one-member voting for change in stance to accommodative.
Bond markets were hoping for some signal of further easing post today’s cut however the statement and the commentary did not hint on the same, also almost unanimous vote on maintaining stance as neutral affected the sentiment. Bond yields have moved up by 10bps after the policy and may remain under some pressure for some time.
MPC sees average inflation for FY 2020 around 3.5% which is below the medium-term target of 4% and MPC also sees FY 2020 GDP growth of 7.2% (consensus: 7%), with lower GDP growth MPC would possible ease more in this fiscal year. If monsoon performance is not bad and food prices remain low bond markets will start pricing in more easing and yields will move lower. One of the important for markets will be election outcome as it will have bearing on fiscal stance.
In near term 10y will trade in the range of 7.20-7.40%.
Housing for all will get a boost as home loans get cheaper: Rohit Gera, Gera Developments quote
This second reduction in the repo rate is a welcome move by the RBI.
The push by the government towards housing for all will get a boost as home loans get cheaper. The interest rate reduction as well as GST rate cut has improved affordability for home buyers.
We expect that this will tilt those home buyers sitting on the fence in a wait and watch mode towards taking a purchase decision. The fact that rates per square foot have been stagnant to negative has led to a substantial reduction in inflation adjusted rates. This makes affordability the highest in many years.
This will help developers clear unsold inventory and restart the cash flow cycle that has been brought to a halt for a multitude of reasons.
The RBI has adopted a very sensible and pragmatic approach : Dr. Joseph Thomas, Emkay Wealth Management
The RBI has adopted a very sensible and pragmatic approach by cutting the repo rate by 0.25 % while keeping the policy stance neutral. It takes cognizance of the likelihood or potential for inflationary pressures emerging from food prices and fuel prices , and also fiscal pressures from the large government borrowing program. The liquidity management through OMOs, Repos and also the occasional currency swaps would help a somewhat better propagation of the impact of rate modifications to the lower levels.
A positive stance : Om Ahuja, K Raheja Corp
The central bank has shown a positive stance by announcing a reduction in key lending rates. This decision will augur well for the country’s GDP growth and key industries particularly residential real estate. Homebuyers now stand to benefit by having a higher purchasing power enabling them to buy premium homes of their choice. Overall, this decision will bring cheer to the housing industry and enhance the investors’ sentiment.”
The back to back rate cut comes at an appropriate time: Jayant Mehrotra, Lodha Group
The back to back rate cut comes at an appropriate time. It would be good if transmission by banks happens quickly as lower interest rates can provide a further boost to end user demand. We could see a significant pick up in momentum during the festivals of Gudi Padwa and Akshaya Tritiya which are around the corner and considered auspicious for buying a home
This rate cut is in line with expectations of economists as well as the industry: Amit Saxena, Unimoni India
This rate cut is in line with expectations of economists as well as the industry. A consecutive rate cut by RBI while keeping the policy stance neutral is a positive development for the lending industry as it would certainly ease out liquidity concerns and improve an easy access to credit by corporate as well as retail consumers. This in turn will boost end consumer demand which is great news for retail NBFCs. The recent spate of cash injections by RBI into the system have helped ease concerns, which had clouded the market sentiment in Q3 last year.
The RBI’s decision will help in reducing the EMI burden: Shailesh Puranik, Puranik Builders Limited
The RBI’s decision to cut the repo rate to 6% comes at the right time and will play a significant role in reducing the EMI burden, especially for first time homebuyers. Moreover, it will equip consumers with a better purchasing power and allow them to buy a home without a steep financial burden. However, we hope the banks pass on this benefit to the homebuyers by lowering the interest rates which will give a big push to affordable housing. Overall, this decision is positive for the end users and the real estate industry.