Ahead of the Reserve Bank’s quarterly review of monetary policy on July 31, many bankers feel moderate inflation may put a pause on rate hikes, brightening the prospects of a cut in home and personal loan rates.

With many bankers asserting that interest rates have more or less peaked in the country, there are indications that the central bank might not be hawkish in its stance, particularly with inflation falling to 4.27 pc for the week ended July 7 from over six pc in April.

Though the central bank’s efforts to suck out excess liquidity in the busy season credit policy in April had borne fruit, there is still some liquidity overhang, which may result in the RBI’s tweaking the cash reserve ratio (CRR), some bankers feel. “There might be some action to suck out liquidity, a hike in the CRR is a possibility,” Development Credit Bank’s Head, Treasury, K Harihar, told PTI. There is definitely a softening visible in interest rates, but this will be more market-led than regulator-driven, Mr Harihar said.
Perception

Yes Bank’s MD and CEO Rana Kapoor said the policy would be substantially intact and was likely to mirror the previous ones. Bank of Baroda’s Chief Anil Khandelwal said that interest rates would soften but he expected it to first happen in the case of deposit rates.

HDFC MD Keki Mistry  feels that interest rates have peaked and the likelihood of it going up further does not appear. While there is a near unanimous perception about rates softening, home loan borrowers may not experience an immediate respite. UBI Chief M V Nair said that they had reduced home loan rates three months back and there was no immediate plan to further reduce them.