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No beating about the bush.
HSBC said on Thursday that there will be no immediate pressure on lending rates even if the RBI squeezes money supply to contain inflationary expectations
Foreign lender Hongkong and Shanghai Banking Corp (HSBC) on Thursday said that there will be no immediate pressure on lending rates even if the Reserve Bank of India (RBI) squeezes money supply to contain inflationary expectations, reports PTI.
Calling for retaining fiscal stimulus to carry forward the growth process, HSBC India head Naina Lal Kidwai told reporters that interest rates could only gradually rise in the next six months.
"That (interest rate rise) is going to happen next month? No. In the next six months, (maybe a) gradual (hike)," she said on the sidelines of a micro-finance conference in New Delhi.
The RBI is slated to come out with its third quarter monetary policy on 29th January. She added that inflation is a concern and will be watched. However, monetary policy is not the only way to contain inflation.
Wholesale price inflation rose to 7.31% in December from 4.78% in the previous month, higher than the 6.5% level by this fiscal-end projected by the RBI. Ms Kidwai added that there is lot of liquidity in banks.
"Can some of this (liquidity) be mopped out? Yes. A small Cash Reserve Ratio hike for example of 0.25% would mean just about Rs8,000 crore going out of the system. It may signal an important change," she added.
Yesterday, the country's largest lender, State Bank of India, had said that interest rates are likely to remain stable as there is surplus liquidity in the system.