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Another RBI Rate Cut To Spark Affordable Real Estate Momentum: Experts
Given the prevailing benign inflation environment and the GDP growth of 6.5 per cent recorded in FY2025, the Reserve Bank is likely to proceed with a 25-bps repo rate cut this Friday (June 6).
'The case for a rate cut is further supported by the revival in the liquidity conditions to a surplus of Rs 3.6 lakh crore, which enhances the effectiveness of monetary transmission. Additionally, the softening of G-sec yields reflects bond market confidence in the RBI's inflation and liquidity management and strengthens the rationale for easing rates,' said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
With the anticipated rate cut, the cumulative reduction in the policy rate in this cycle would be 75 bps.
However, the focus must now shift to the pace and breadth of transmission.
'While some commercial banks have begun to lower their MCLR and base rates, the adjustments have been modest. With liquidity conditions stabilising, there is now greater scope for commercial banks to accelerate the pass-through of policy easing to borrowers. This will be key to spurring consumer demand and private investment, ultimately supporting economic growth,' Baijal noted.
The Central Bank is projected to cut the repo rate by another 50 basis points (bps) this fiscal (FY26), after the 50 bps cut until April this year. Bank lending rates have begun easing, which should support domestic demand, according to a latest Crisil note.
Experts said that with EMIs constituting a significant share of monthly income in affordable category, even a modest reduction in lending rates can influence buying decisions, providing the necessary momentum to support this price-sensitive demand segment.
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