Interest rates may go up: Survey

The pre-Budget Economic Survey said on Wednesday that interest rates may go up due to high fiscal deficit and improved credit demand.

The pre-Budget Economic Survey hinted on Wednesday that interest rates may go up due to high fiscal deficit and improved credit demand from commercial sector.

HT Image

"With fiscal deficit remaining high and signs of pick up in the flow of credit to commercial sector, the possibility of interest rates moving northwards cannot be ruled out," the survey, tabled in Parliament, said.

It also said Reserve Bank of India has continued its soft interest rates policy stance, imparting greater flexibility to the interest rate structure.

RBI had progressively reduced the Bank Rate, the interest it charges to the commercial banks, to six per cent and the Repo Rate, the interest charged by the banks when they lend to RBI, to 4.5 per cent.