HDFC Bank sees RBI increasing key interest rates again

Mumbai: Leading private sector lender HDFC Bank today said it expects the Reserve Bank of India (RBI) to increase its key interest rates at least twice to contain the spiraling inflation.

"What they (RBI) will do in this policy, I don't know, but one or two rate hikes are in the offing till inflation comes under control," HDFC Bank Managing Director Aditya Puri told reporters here on the sidelines of the bank's annual general meeting.

The central bank has since March 2010 raised key interest rates ten times, with the latest on June 16 when it hiked short-term lending and borrowing rates by 25 basis points each to 7.5 and 6.5 per cent, respectively.

"We are fortunate the oil price is coming down, global economy is slowing so commodity prices will come down. So atleast the supply side factors will come down by a bit," he added.

After a month-long uptrend, food inflation plunged to one-and-a-half month low of 7.78 per cent for the week ended June 18, down from 9.13 per cent in the previous week as vegetables and pulses became cheaper.

Puri added that his bank so far has not faced pressure on its margins and credit demand.

"We as a bank have not faced pressure on credit offtake and margins. Our margins are sound and our credit offtake has grown," he said, adding the lender would maintain its net interest margin in the range of 3.9-4.2 per cent during the current fiscal.

Source: Financial Express