Mumbai: Finance minister, P Chidambaram has indicated the need for a rate cut and thinks it's time that the consumers got a breather.
"The interest rates in 2008 will remain steady. There won't be large variations in the interest rates whether up or down,” says Deepak Parekh, HDFC Bank.
However this seems to be the overall outlook on interest rates for the year 2008. With inflation at 3.5 per cent, a five-year low, falling global interest rates, and surplus liquidity with banks, the finance guardian of our country thinks it's time to be consumer friendly.
"I can't wish both deposit and interest rates in the economy to come down by atleast 50 basis points,” says P Chidambaram, Finance Minister.
The Finance minister has also asked banks to give you and me more money to spend. Especially since he thinks, with consumers having less money to spend, it is adding up to a slowdown in sectors like auto and consumer durables. However, although the banks share his beliefs, the correction they think could take some time.
"In the immediate term, I think the rates will be benign but there may be a case for some softening only towards the end of this fiscal," says KC Chakraborty, CMD, PNB.
"I guess, interest rates would marginally come down by a quarter to half a per cent in the next six months," says Deepak Parekh, HDFC.
However, even as a rate cut would mean good news simply by making money cheaper to borrow, the bigger question playing in the minds of consumers is, will the banks really ever pass on the benefit to existing consumers or, will this remain yet another opportunity for the banks to attract fresh consumers.
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