Dev Singhraha
Relocation Expert
As expected, the Reserve Bank of India (RBI) kept the interest rate unchanged in its fifth monetary policy review on December 6, 2017. The central bank kept the repo rate unchanged at 6 percent and the reverse repo rate at 5.75 percent.

ICRA the credit rating agency has already predicted that the central bank most likely will keep the repo rate unchanged. Repo rate is the rate at which the RBI lends money the different banks.

However, soon after this was announced there was a drop in Sensex by 205 points to end at 32,597.18 whereas the Nifty dropped 10,033.35 before ending at 10,044.10, that is down by 74.15 points or 0.73 percent.

As per the RBI, “activity in the services sector decelerated, mainly on account of slowdown in financial, insurance, real estate and professional services, and in public administration, defence and other services (PADO) following the large front-loading of government expenditure in the first quarter”.

RBI policy statement stated, “Despite some improvement, the construction sector growth remained tepid due to transitory effects of the RERA (Real Estate Regulation Act) and GST (Goods and Services Tax) implementation.”

The statement further stated that “While there has been a weakness in some components of the services sector such as real estate, the Reserve Bank’s survey indicates that the services and infrastructure sectors are expecting an improvement in demand, financial conditions and the overall business situation in Q4.”

Talking about RBI Policy, Ashwin Sheth, Chairman and Managing Director- Sheth Group said, “The fifth bimonthly RBI Policy announcement of FY2017-18 by RBI Governor, Mr Urjit Patel maintaining status quo and keeping the repo rates unchanged at 6 percent was an expected move.”

He further added that, “A rate cut at a time when the economy is showing signs of revival would have been an ideal way to end the year. However, keeping the growing inflation in mind, the current decision was taken. Homebuyers who were eagerly anticipating a rate cut would now have to wait a little longer for banks to pass on the benefits."

 Further industry experts suggest that this is the best time for the buyers to buy their home as the interest rated are at the lowest lever and immediately the rates are unlikely to get changed. The real estate is still struggling with the new policies that have been implemented recently but once everything is set, the sector is expected to get normal in future.
RBI’s next meeting has been scheduled for the month of February.
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