Mumbai: Mortgage lender Housing Development Finance Corp. Ltd (HDFC) expects the Reserve Bank of India (RBI) to raise interest rates in the March quarter on inflationary concerns, its chairman said on Wednesday.

“It would be a token, marginal hike. It is just to give a signal that the government and the central bank is concerned about inflationary pressures," Deepak Parekh said on the sidelines of an industry conference.

He said a jump in residential prices was a concern on initial signs of demand reviving.

Indian real estate firms have been quick to raise prices by 15-20% in the past two months as residential demand picked up after a slump of at least a year and as mortgage rates stayed low.