<p>Most of them said the hike was on expected lines and even the market factored it.<br />Housing prices are likely to go up on account of an expected rise in the developers’ borrowing costs following hike in key interest rates, but realtors do not foresee demand being dampened during ensuing festive season.<br /><br />“Interest rates on home loans as well as on developers’ borrowings are bound to go up. Housing prices, which have gone up by 15-20 per cent in last one year, will further increase as we are not left with no choice but to pass on the same to buyers,” Confederation of Real Estate Developers’ Association of India (Credai) Chairman Pradeep Jain said.<br /><br />Bank of Baroda (BoB) Chairman & Managing Director M D Mallya said “the rate hike is on expected lines and the direction which the policy gives is towards more hardening.”<br />“Difficult decision in tough times,” said Bank of India CMD Alok K Misra and pointed out that decision to pass on the rate hike will depend on how the overall economic situation evolves.<br /><br />“We may see a lag effect in the transmission of rate hike. While the retail can get a marginal push in view of the ensuing festive season and the recent hike in DA but the general investment climate may remain subdued while overall economic situation appears difficult in view of the continuing problems in US and Europe,” Misra said.<br /><br /> Any revision in rates by banks would happen in April when the new fiscal year begins. In this context, Indian Overseas Bank (IoB) CMD M Narendra said the RBI monetary tightening action is not going to translate into interest rate revision immediately. “I think rates would remain stable during this month. Beyond March it would depend on various factors like call money rates etc,” he added.<br /><br />Union Bank of India Executive Director S C Kalia said the hike was on expected line. He said though policy signal in clear but it may not result in rate hike befor March-end. The Kolkata headquartered United Bank of India CMD Bhaskar Sen said, “there is a possibility (hike in interest rates) definitely. It will increase our funding cost also.”<br /><br />HDFC Bank Head Treasurer Ashish Parthasarthy said there was “almost a consensus” about such an action and the market had factored in such a hike.” Punjab & Sind Bank Executive Director P K Anand said till March 31 banks are unlikely to tinker with their rates.<br /><br />Yes Bank Chief Financial Officer Rajat Monga said the deposit rates--that react first — offered by banks are already very high and should not see a spike in the near future. However, he felt, there is “pent-up” pressure of the lending rates and the banks will upwardly revise them starting April with reviews of the base rate.<br /><br />Bank of Baroda Chief Economist Rupa Rege-Nitsure said the central bank has taken a “hawkish” stance and added that there will be more tightening in the next year. A lot should be read into the avoidance of the word ‘calibrated rate hikes’ by RBI in its policy announcement, she added.<br /><br />Vijaya Bank CMD HS Upendranath Kamath said: “Credit growth is something which we may see slowing down. RBI is aware and they have themselves reduced guidance for credit growth. And, on ground level also, we are seeing that credit growth is gradually slowing.”<br /><br />Bank of India Executive Director N Seshadri said “Capex is not happening, investment loans are not happening. Next couple of months will give some sort of indication but we believe there will be a pause (in rate hikes). So, after that, people will start thinking about fresh investments and we may see growth back in last two quarters.”<br /><br />Anubhuti Sahay, Standard Chartered Bank Economist said “While the policy action is in line with expectation, the statement is more hawkish than expected.... Also RBI has once again pronounced the future inflation trajectory as the key factor for monetary policy formulation, more hikes look very likely. We see yet another 25 bps increase in repo rate in the October policy meeting as WPI is unlikely to come below 9 per cent before October/November.”<br /><br />Manish Wadhawan at HSBC said: “They have raised concerns on inflation.... I don't expect the long-end swap rates to rise much from here, but the front-end will remain elevated on further rate hike expectations which could lead to bear flattening of the swap curve.”<br /></p>
<p>Most of them said the hike was on expected lines and even the market factored it.<br />Housing prices are likely to go up on account of an expected rise in the developers’ borrowing costs following hike in key interest rates, but realtors do not foresee demand being dampened during ensuing festive season.<br /><br />“Interest rates on home loans as well as on developers’ borrowings are bound to go up. Housing prices, which have gone up by 15-20 per cent in last one year, will further increase as we are not left with no choice but to pass on the same to buyers,” Confederation of Real Estate Developers’ Association of India (Credai) Chairman Pradeep Jain said.<br /><br />Bank of Baroda (BoB) Chairman & Managing Director M D Mallya said “the rate hike is on expected lines and the direction which the policy gives is towards more hardening.”<br />“Difficult decision in tough times,” said Bank of India CMD Alok K Misra and pointed out that decision to pass on the rate hike will depend on how the overall economic situation evolves.<br /><br />“We may see a lag effect in the transmission of rate hike. While the retail can get a marginal push in view of the ensuing festive season and the recent hike in DA but the general investment climate may remain subdued while overall economic situation appears difficult in view of the continuing problems in US and Europe,” Misra said.<br /><br /> Any revision in rates by banks would happen in April when the new fiscal year begins. In this context, Indian Overseas Bank (IoB) CMD M Narendra said the RBI monetary tightening action is not going to translate into interest rate revision immediately. “I think rates would remain stable during this month. Beyond March it would depend on various factors like call money rates etc,” he added.<br /><br />Union Bank of India Executive Director S C Kalia said the hike was on expected line. He said though policy signal in clear but it may not result in rate hike befor March-end. The Kolkata headquartered United Bank of India CMD Bhaskar Sen said, “there is a possibility (hike in interest rates) definitely. It will increase our funding cost also.”<br /><br />HDFC Bank Head Treasurer Ashish Parthasarthy said there was “almost a consensus” about such an action and the market had factored in such a hike.” Punjab & Sind Bank Executive Director P K Anand said till March 31 banks are unlikely to tinker with their rates.<br /><br />Yes Bank Chief Financial Officer Rajat Monga said the deposit rates--that react first — offered by banks are already very high and should not see a spike in the near future. However, he felt, there is “pent-up” pressure of the lending rates and the banks will upwardly revise them starting April with reviews of the base rate.<br /><br />Bank of Baroda Chief Economist Rupa Rege-Nitsure said the central bank has taken a “hawkish” stance and added that there will be more tightening in the next year. A lot should be read into the avoidance of the word ‘calibrated rate hikes’ by RBI in its policy announcement, she added.<br /><br />Vijaya Bank CMD HS Upendranath Kamath said: “Credit growth is something which we may see slowing down. RBI is aware and they have themselves reduced guidance for credit growth. And, on ground level also, we are seeing that credit growth is gradually slowing.”<br /><br />Bank of India Executive Director N Seshadri said “Capex is not happening, investment loans are not happening. Next couple of months will give some sort of indication but we believe there will be a pause (in rate hikes). So, after that, people will start thinking about fresh investments and we may see growth back in last two quarters.”<br /><br />Anubhuti Sahay, Standard Chartered Bank Economist said “While the policy action is in line with expectation, the statement is more hawkish than expected.... Also RBI has once again pronounced the future inflation trajectory as the key factor for monetary policy formulation, more hikes look very likely. We see yet another 25 bps increase in repo rate in the October policy meeting as WPI is unlikely to come below 9 per cent before October/November.”<br /><br />Manish Wadhawan at HSBC said: “They have raised concerns on inflation.... I don't expect the long-end swap rates to rise much from here, but the front-end will remain elevated on further rate hike expectations which could lead to bear flattening of the swap curve.”<br /></p>
