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ICICI sees further cut in interest rates as inflation slides

ICICI sees further cut in interest rates as inflation slides
PTI
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First Published: Thu, Feb 19 2009. 04 35 PM IST
Updated: Thu, Feb 19 2009. 04 35 PM IST
New Delhi: The country’s largest private sector lender, ICICI Bank, sees further softening of interest rates with inflation sliding to a 13-month low of 3.92%.
“Clearly there is a downward pressure on interest rates. There is further scope for rate cut”, ICICI Bank managing director KV Kamath told reporters on the sidelines of a CII function here on Thursday.
Noting that inflation was inching towards 2% mark, he said, home loan rates too are expected to slide further.
“In the near term, mortgage rates will come down to single digit ... some of them already are” (in single digit), he added.
Inflation declined to over 13 months low of 3.92% for the week ended 7 February.
Indicating further reduction in rates, RBI governor D Subbarao too had said in Tokyo on Wednesday, “There certainly is room for cutting rates. The question is whether we should cut rates, when we should cut rates and by how much we should cut rates.”
The rate cuts, Kamath further said, depends on what is happening in the government borrowings.
“When you have clarity on government borrowings. Then we will determine where the interest will set. Government borrowings upset the market,” he added.
He said correction in deposit rates have already started and will be followed by similar improvements in the bond markets. The increase in bond yields, has to come down.
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First Published: Thu, Feb 19 2009. 04 35 PM IST