The Monetary Policy Committee (MPC) increased the repo rate, or the key rate at which the RBI lends short-term funds to commercial banks, to 5.9% from 5.4%.
It also decided to remain focused on the withdrawal of the accommodative stance. This was the fourth straight rate hike and the third half-percentage point hike.
The RBI’s rate hike will also have an impact on the growth of residential sales. Builders throughout the country had also lifted real estate prices in response to the ongoing rise in raw material costs.
When the repo rate rises, the borrowing cost for banking institutions rises as well, which is passed on to account holders in the form of higher loan and deposit interest rates.
When the repo rate rises, the borrowing cost for banking institutions rises as well, which is passed on to account holders in the form of higher loan and deposit interest rates.
The real estate sector, which has seen a good pickup in sales due to low financing costs, may be adversely affected by the RBI’s rate hike step,” said Suren Goyal, Partner, RPS Group.
