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Below the perspective on the RBI MPC Meeting by  Mr. Shishir Baijal, Chairman and Managing Director, Knight Frank India

“The central bank’s decision to maintain a pause in policy repo rate is in line with our expectation, and we consider this a comforting signal for the industry. Even though the inflationary pressures in most consumption categories have ebbed, food inflation continues to remain volatile. The RBI continues to remain watchful of inflationary expectation and liquidity condition, which is currently in deficit, and it may continue to further tighten the liquidity condition to rein in inflation. The fiscal consolidation plan outlined in the interim budget announcement, aiming to gradually reduce fiscal deficit to 4.5% over the next two years, also provides a buffer against potential inflationary pressure. All these measures have the potential to bring down inflation to the 4% target of the RBI which will be comforting for the central bank to gradually pivot with a rate cut.  In case of the country’s housing market, even as the mid and premium segment continue their growth trajectory, the lower segment has witnessed pressure from elevated interest rates and higher property prices. We believe that lower home loan interest rate in near future will serve as a big boost to homebuyer sentiment and enable better affordability, which is an extremely sensitive factor in this segment of housing market.”

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