The Reserve Bank of India’s Monetary Policy Committee, led by Sanjay Malhotra, kept the repo rate unchanged at 5.25 per cent, as ongoing tensions in West Asia continue to weigh on the global economic outlook. The central bank concluded its policy review on Wednesday and projected India’s real GDP growth for FY27 at 6.9 per cent, while maintaining a cautious stance amid external uncertainties.
The decision has elicited a broadly positive yet cautious response across sectors, with industry leaders welcoming policy stability but highlighting risks from global volatility, inflation pressures and the possibility of future rate shifts.
Sanjay Dutt, MD and CEO of Tata Realty and Infrastructure, said the move reflects “a balance between India’s domestic growth momentum and evolving global uncertainties,” noting that inflation remains within the comfort band even as geopolitical tensions continue to pose risks.
He added that cumulative rate cuts over the past year have created “a softer interest rate environment,” although transmission across segments is still playing out, underlining the importance of liquidity management and policy transmission. The expected clarity around External Commercial Borrowings (ECBs), he said, could “improve capital access and deepen institutional participation” in the real estate sector.
Final Pause Before Rate Cycle Turns?
Stable interest rates are expected to sustain housing demand and improve visibility for both developers and homebuyers.
Shrinivas Rao, CEO, Vestian, said the continued pause in repo rates will help keep mortgage rates steady and competitive despite elevated construction costs arising from the West Asia crisis. He, however, cautioned that this may be the “final status quo before the repo rate begins to move upward.”
Echoing similar views, Piyush Bothra, Co-Founder and CFO, Square Yards, said stable borrowing costs are expected to support demand, particularly in mid-income and premium segments, while strengthening buyer sentiment and enabling better planning for developers and lenders.
At the same time, the housing market is undergoing a correction after years of strong sales, Lalit Parihar, Managing Director, Aaiji Group, said, adding that the rate pause will help support confidence by enabling borrowers to benefit from earlier rate cuts.
Global Risks Keep RBI On Guard
Industry leaders also flagged concerns around global developments and their potential impact on inflation and sectoral activity.
Vimal Nadar, National Director and Head of Research at Colliers India, described the RBI’s stance as a “wait-and-watch” approach amid the ongoing West Asia crisis, which continues to affect commodity prices and supply chains.
While inflation remains relatively contained, crude price volatility has led to some upward pressure, he noted, adding that supply disruptions and rising construction material costs could impact ongoing and future real estate activity, particularly in affordable and mid-income segments.
At the same time, the decision reflects “a balanced and prudent approach amid evolving global uncertainties,” said Prakhar Agrawal, Director, Rama Group. He added that stable interest rates will help sustain buyer sentiment and keep home loan EMIs predictable, enabling both developers and homebuyers to plan long-term investments.
“The move is expected to support housing demand in mid-income and premium segments while reinforcing overall market stability,” he noted.
Capital Flows, Investment Strategies Shift
The policy stance is also expected to influence investment behaviour and capital allocation strategies. Ankur Jalan, CEO, Golden Growth Fund, said a stable policy environment is likely to support capital inflows into financialised instruments such as Alternative Investment Funds, adding that global uncertainty may prompt HNIs and NRIs to reassess and realign their portfolios.
In the commercial real estate segment, stable borrowing costs are seen supporting long-term business decisions and expansion.
Umesh Uttamchandani, Managing Director, Dev Accelerator, said the steady rate environment enhances visibility for enterprises and supports long-term decision-making in the managed office segment. He added that India continues to witness strong demand from Global Capability Centres, with expansion spreading beyond metro cities into Tier 2 and Tier 3 markets.
Overall, while the RBI’s policy stance supports near-term stability across sectors, evolving global risks, inflation trends and the possibility of future rate adjustments continue to shape business sentiment and investment decisions. |
