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Below are Perspective on the RBI monetary policy by Mr. Shishir Baijal, Chairman & Managing Director, Knight Frank India

POSITIVE INTERVENTION BY RBI WILL BOOST THE REAL ESTATE SECTOR

“The decision to maintain the REPO and reverse REPO rate by the RBI is in line with expectations. While the recent moderation in headline inflation rate has lent comfort, RBI will be cautious of demand side inflation picking up as economic growth momentum picks up. Measures on enhanced bank funding window for NBFCs will also benefit the stressed sectors including real estate.

With a growth focussed budget recently presented by the finance minister, that further supports the government’s aim of nurturing the economy, this status quo will further allow demand creation including for high involvement products like real estate. As most global agencies have touted, India is expected to recover faster from the COVID induced slowdown mostly based on the restoration of the domestic consumption – which has greatly benefitted from the benign interest rate regime and infusion of liquidity.

As seen in the past few months, housing markets in the country have responded well to low home loan interest rate. Given the interlinkages of the housing market with other sectors of the economy, we believe that low interest rate for a sufficiently long period of time will help build a strong and broad-based demand momentum in the Indian real estate market.”

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