Indian economy is an island of macro economic, financial stability: RBI Guv

RBI Governor Shaktikanta Das. Photo: Reuters/Francis Mascarenhas

Reserve Bank of India Governor Shaktikanta Das on Friday said the country's economy is an island of stability despite two Black Swan events and multiple shocks.

"In an ocean of high turbulence and uncertainty, Indian economy is an island of macroeconomic and financial stability," Das told reporters during the post-policy press conference.

He said the financial stability, macroeconomic stability, and resilience of growth are being witnessed despite two Black Swan events happening one after the other and multiple shocks.

Generally, a Black Swan event refers to an unpredictable event that has negative consequences. Das, however, did not list out the two Black Swan events that he referred to.

In recent times, the coronavirus pandemic and the Russia-Ukraine war have significantly impacted the global economy.

The governor said the monetary policy will be calibrated, measured, and nimble, going forward.

Inflation has peaked and will moderate but is at unacceptably high levels, he said.

He also said the country's current account deficit will be manageable and the central bank can manage the gap.

Short-term impact on housing sales, say realtors
Housing sales are likely to be hit, especially in affordable and mid-income categories, following the RBI's decision to hike the repo rate, according to real estate developers and consultants.

However, the impact of RBI's decision to raise the benchmark lending rate is expected to be for the short term, they added.

"A hike by 50 basis points is definitely on the higher side, and home loan lending rates will now edge further into the red zone," real estate consultant Anarock Chairman Anuj Puri said.

This finally marks the end of the all-time best low-interest rates regime, one of the major factors that drove housing sales across the country since the pandemic, he added.

"This whammy comes along with the inflationary trends of primary raw materials, including cement, steel, labour, etc., that have recently led to a rise in property prices. Together, these factors - rising home loan rates and construction costs - will impact residential sales that did reasonably well in the first half of 2022," Puri said.

Colliers India CEO Ramesh Nair said several banks have already begun hiking home loan rates and this trend is expected to continue. "...the higher home loan rates could dent homebuyers' sentiments, especially in the affordable to mid category. However, we do not see a significant impact on the high-end and luxury segments due to the higher home loan rates," he said.

The impact of the rate hike will be predominantly on the affordable housing side, which is primarily driven by sentiments and especially first-time homebuyers who are heavily reliant on home loans, said Lincoln Bennet Rodrigues, Chairman & Founder of Goa-based The Bennet and Bernard Company.

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