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Interest Rates Are On Pause, So Are Increases On Your Home Loans

By Govindraj Ethiraj
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Interest Rates Are On Pause, So Are Increases On Your Home Loans
On today’s episode, financial journalist Govindraj Ethiraj talks to Dr. Brinda Jagirdar, independent consulting economist and independent director on the board of IDFC First Bank and various other companies.

  • <00:41> Interest rates are on pause, so are increases on your home loans with Brinda Jagirdar
  • <08:18> Starbucks to cut prices and offer smaller cups of coffee and tea
  • <09:54> GoFirst is still grounded but other airlines are adding capacity, this time it’s Vistara who says will add 10 aircraft. 


 

TRANSCRIPT

NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.

Good morning, it’s Friday the 8th of June and I’m Govindraj Ethiraj coming to you from Mumbai, India’s financial capital

  • Interest rates are on pause, so are increases on your home loans
  • Starbucks to cut prices and offer smaller cups of coffee and tea
  • GoFirst is still grounded but other airlines are adding capacity, this time it’s Vistara who says will add 10 aircraft.

Interest rates are paused

I have a strong feeling that my threat to picket the Reserve Bank of India headquarters if they raised their interest rates and thus my home loan worked.
Even if it did not, the Reserve Bank did pause rates as many had predicted and people like me had hoped.
The RBI kept the key repo or repurchase rate unchanged at 6.5%.
The RBI governor Shakti Kanta Das said that the cumulative rate hike undertaken by the Monetary Policy Committee of the central bank is transmitting through the economy and it’s fuller impact should keep inflationary pressures contained in the coming months.
The monetary policy would need to be carefully calibrated for alignment of inflation with the target, he aside.
Since May 2022, the RBI has increased the repo rate or the interest rate at which it lends money to commercial banks by 250 basis points or 2.5%.
Yesterday I spoke of home loans going from around 6.75% to close to 9% and 10% now.
The impact has been substantial, EMIs could have gone up almost 16% in the case of a 15 year loan and 20% in the case of a 20-year loan.
Governor Das said as inflation is expected to remain above RBI’s comfort level in FY24, thus the central bank will remain data dependent for future course of action. Also, following the demonetization of INR 2000 note, liquidity is expected to remain in surplus for some time and thus change in stance was not warranted.
Whether this was a warranted or unwarranted outcome of the move to demonetise the Rs 2,000 note…well I don’t really know, i just hope that those who did…did so.
The markets closed a little lower yesterday. The S&P BSE Sensex tumbled 294 points to 62,849 levels and bank stocks were generally under pressure.
The markets had higher expectations for a more optimistic revision in the inflation outlook, taking into account the recent easing of inflation data.
Speaking of bank stocks, the Canada Pension Plan Investment Boardwill likely sell a partial stake in private Kotak Bank through block deals tomorrow, according to various newspapers and television channels. The Fund which owns a 4.6% stake will sell around a 1.66% stake worth $754 million

Back to the credit policy, I caught up with Dr Brinda Jaghirdar, independent consulting economist and independent director on the board of IDFC First Bank and various other companies. I began by asking her how she viewed the RBI decision to hold interest rates ?

Well, on the subject of inflation and rising prices. Mother Dairy, a leading milk supplier in the Delhi-NCR region said it was reducing the maximum retail price of its Dhara edible prices by Rs 10 per litre..in line, with falling prices of edible oils in the global market.
Whether falling prices of edible oils could influence the cost of house rentals in Mumbai city and make them more affordable I don’t know. But one can always hope.

On the topic of affordability Mercedes-Benz India has rolled out its iconic SUV, the G-Class, in two variants, with a price tag of Rs 2.55 crore onwards. The two variants are G 400d Adventure Edition and the G 400d AMG Line.
Deliveries of both the variants are expected to commence from October-December quarter of 2023, Mercedes said.
Yes its a bit of a wait if you were realling longing for it.

Still sticking to prices and affordability, coffee chain Starbucks has, in a lo and behold moment, said it is cutting prices and introducing smaller servings, discovering after 11 years and 343 stores that most Indians actually actually don’t drink all that much.
"As you grow in size, you need to get new consumers," Sushant Dash, Starbucks CEO in India told Reuters, adding the chain's "pricing play" would help shatter a perception that it is expensive. Though the target remains…did you guess it..yes, affluent Indians
The chain also promised not to make chai a principle offering, acknowledging that just 11% of Indian homes drink coffee, as opposed to 91% drinking tea.
Starbucks which has just one milk chai "latte" made with tea syrup has now launched "Indian-inspired" tea offerings laced with spices and cardamom. Or better known as masala chai.

And in today’s airline news, Go First is still trying to get off the ground after a month but Vistara has said it will add 10 planes this financial year, three wide bodies and the rest A320s and hire a 1,000 people.

Vistara has 61 aircraft and employes 5,200 and will soon be merged with Air India which belongs to the Tatas. Vistara is a JV between the Tatas and Singapore Airlines.
The airline’s CEO told news agencies that they had decided not fly to the US as planned earlier as they would need more aircraft, at least three. And by the time they would come, it would start getting merged with Air India.
Speaking about flights to the US and Air India, an Air India Delhi- San Francisco non stop flight was forced to land in Magadan in Russia following an engine snag.
A ferry flight that went to fetch them picked them up roughly two days later and transported them safely to their original destination. They originally left Delhi on Tuesday morning at 12:05 am and reached San Fransico on Thursday afternoon India time.
Air India has said it will refund fares to all 216 passengers, a move that has pleasantly surprised many.