The visible cooling off in CPI to 6.77% from 7.4% in September 2022 is a clear indicator of the monetary policy interventions bearing fruit. This is still above the RBI head band of 6% for the 10th month in a row but lowest in three months. The 190 bps policy rate hike across four tranches since May 2022 was aimed at inflation targeting and the incoming numbers are definitely a positive sign as supply-side concerns have eased up. This augurs well for the RBI to hopefully take a more accommodative stance in the next meeting as the declining inflation provides headroom to take a go-slow approach on future hikes.

In addition to domestic factors, our policy rate hikes were in response to similar actions being taken by other global central banks, particularly the US Fed. Now with the signs showing easing of global inflationary trends, there are indications of a slowing down in future Fed hikes as well. These evolving global trends are also likely to have a bearing on RBI’s future policy hikes. A lesser than expected policy hike rate by the RBI would support the ongoing momentum in the residential markets. India’s primary apartment sales in the top seven urban centres are expected to cross 200,000 units in 2022, for the first time since 2010. With banks likely to delay passing on further significant hikes to consumers in the immediate term, we expect that home purchase synergies should remain largely intact for the time being.

Dr. Samantak Das, chief economist, and head of research and REIS, India, JLL

By Rekha