HDFC Chairman expects RBI to cut rates

Wednesday, February 18, 2009 at 4:02 am under Business News

The country’s largest housing finance company, Housing Development Finance Corporation (HDFC), on Tuesday (February 17) said it expects RBI to signal further cut in interest rates in the next few weeks, with inflation softening to 4.39%. “RBI may not take measures immediately but after a few weeks,” HDFC Chairman Deepak Parekh told reporters in New Delhi.

Parekh said inflation numbers have come down significantly and are very encouraging. “Inflation numbers are on the downward trend. If inflation numbers are coming down, there is better chance for interest (rates) to come down than go up,” he said. Inflation has softened to 4.39% by the end of January this year against the peak of around 13% in August 2008.

Meanwhile, Citi Group’s research arm said given the upcoming elections, the entire onus on stimulating growth now rests on monetary policies. “We expect additional easing to the tune of 100-150 basis points,” Citi economist Rohini Malkani said.

On additional borrowing of Rs 46,000 crore by the government from February 20 to March 20 this year, Parekh said, “There are other ways and means by which the government can take care of it. All the 46,000 crore does not come out of the banking system. Today, there is adequate liquidity in the banking system, so the chances of interest rates going down are very minimal.”

(With inputs from agencies)

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