Interest rates will dip, the question is how soon: Kidwai

Interest rates are bound to dip despite fresh inflationary pressures fuelled by the recent hike in petrol prices, an influential banker said.

Interest rates are bound to dip despite fresh inflationary pressures fuelled by the recent hike in petrol prices, an influential banker said.

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“Interest rates will come down but the question is how fast,” Naina Lal Kidwai, group GM and country head, HSBC India told Hindustan Times.

Inflationary pressures are up, but the fuel prices were raised due to supply-side constraints, Kidwai pointed out, adding the central bank could decide to ease interest rates. “There had some demand-led price hike last year which has already been curtailed by the Reserve Bank of India after the interest rate hikes... the central bank can now reverse the trend," Kidwai said.

Credit growth, though, has slowed down, and could be around 15-16% in 2012-13, she said, expressing hope that demand from the real estate sector would soon.

She felt that some sectors have become cause for concern. “We need to take a hard look into a few sectors such as the power sector and the government and industry must work together to fix the problems.”

To ensure speedy and timely implementation of mega projects, the government has set up a tracking system that will monitor all projects with outlays of over R1,000 crore.