The 25 basis point hike in repo rate by the Reserve Bank of India (RBI) in its mid-term review, received a mixed response.

Pradeep Jain, Chairman, Parsvnath Developers, and Chairman, Confederation of Real Estate Developers' Association of India (CREDAI), said that “just increasing the key policy rates is not going to tame inflation; the Reserve Bank has hiked key policy rates ten times since March 2010 in its bid to tame inflation. Inflation continues to remain high. We request the central bank to make provisions so as to increase the supply in the market. These increases in key rates are making an impact on growth. Government should consider working out a mechanism/structure so that production and manufacturing will kick-start”.These increases in the policy rates will increase the cost of properties as it increases the cost of funds.

Sandesh Kirkire, Chief Executive Officer, Kotak Mutual Fund, said that while the rate hike was largely on expected lines, the measures taken by RBI reveal that non-food inflation, mainly fuel, remains its main concern. They have consequently indicated a continuation in the policy stance, and therefore, further rate hikes can be expected in the next review.

Melwyn Rego, ED, IDBI Bank, said, “The increase in the repo rate is very much in line with our expectations. One of the key objectives of RBI is to keep a check on inflation numbers in order to achieve sustained growth.

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