RBI’s Calibrated Tightening Signals Higher Borrowing Costs, but Growth Outlook Supports Real Estate

“The RBI’s 25 bps repo rate hike to 5.50% is broadly in line with our expectations, given the challenges posed by weak monsoons, the potential impact of El Niño, heightened geopolitical conditions and global trade and inflationary pressures. The shift to a ‘calibrated tightening’ stance signals that further rate action will remain data dependent. For real estate, higher borrowing costs could create some affordability pressures, particularly in interest-rate-sensitive and lower-priced segments, but we do not expect a material disruption to the sector’s broader trajectory in the near future. The economy has remained resilient, which is adequately demonstrated by the upward revision of GDP growth for FY27 from 6.7% to 7.1%. We expect key aspects like private consumption and housing demand to sustain and provide a strong foundation for continued growth.”- Shishir Baijal, CMD- Knight Frank India