RBI Likely to Announce Rate Cut on June 6 – Real Estate Sector Eyes Relief
As the Reserve Bank of India (RBI) prepares for its Monetary Policy Committee (MPC) meeting on Friday, June 6, industry leaders anticipate a 25 basis point (bps) repo rate cut, driven by stable inflation and robust GDP growth.
New Delhi: As the Reserve Bank of India (RBI) prepares for its Monetary Policy Committee (MPC) meeting on Friday, June 6, industry leaders anticipate a 25-basis point (bps) repo rate cut, driven by stable inflation and robust GDP growth.
The expected move could significantly revive borrowing demand, especially in the affordable housing segment, which is highly sensitive to interest rate fluctuations.
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6.5% GDP Growth and Stable Inflation Create Room for Rate Cut
India’s GDP growth of 6.5% in FY2025 and a benign inflation environment have set the stage for policy easing. The liquidity surplus of ₹3.6 lakh crore, along with the softening of G-sec yields, reinforces confidence in the RBI’s monetary management and strengthens the case for a rate cut, according to Shishir Baijal, CMD of Knight Frank India.
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“The bond market clearly reflects confidence in RBI’s inflation and liquidity control. A rate cut is now both warranted and strategically timed,” Baijal added.
Transmission of Rate Cuts Crucial for Affordable Housing Momentum
Experts caution that while the rate cut is welcome, the pace of transmission—i.e., how quickly banks lower lending rates—remains key. Though some commercial banks have marginally reduced MCLR and base rates, the overall adjustments have been modest so far.
“With improved liquidity conditions, there is ample room for banks to pass on rate cuts more aggressively. This will directly influence consumer sentiment and boost demand in affordable housing,” Baijal noted.
Affordable Housing Segment Most Impacted by Lending Rates
The affordable housing market remains highly interest-rate sensitive, with EMIs often taking up a significant share of household income. Even a small drop in interest rates can positively sway buyer decisions in this price-conscious segment, making rate transmission a critical factor.
A recent Crisil report echoes similar sentiments, noting that with bank lending rates beginning to ease, domestic demand is likely to strengthen further through FY2026.
RBI May Cut Another 50 bps in FY26
If Friday’s anticipated 25 bps cut goes through, it would mark a cumulative 75 bps reduction in the current monetary cycle. Analysts forecast that the RBI may introduce an additional 50 bps cut during FY2026, providing more stimulus to consumer spending and private investment.
