Little chance of rate cut on July 31: Parekh

[1]

There is a very slim chance of the Reserve Bank cutting interest rates in the forthcoming monetary policy meeting scheduled on July 31, HDFC Chairman Deepak Parekh on Thursday said.

"Unless the Reserve Bank sees a trend that inflation is actually coming down, I don't see the Reserve Bank reducing interest rates," Parekh told the company's shareholders at its annual general meeting here.

He said even though there has been a softening in the crude and commodity prices, the gains have been eroded by the sharp depreciation in the rupee, which has lost over 25 per cent a dollar since last August.

There has been a clamour for a cut in repo rate from the RBI in its quarterly review of the monetary policy slated for July 31. RBI governor D Subbarao recently said that sacrificing some economic growth is necessary to rein in price rise.

The headline inflation for May had stood at 7.55 percent while the food inflation was near the double digit mark. HDFC's vice chairman and chief executive Keki Mistry feels that the RBI will wait for forthcoming data releases like the factory output scheduled for tomorrow and inflation before taking a call on cutting rates.

"If inflation numbers have started looking lower, if monsoons have been good by that time, then RBI will look at a quarter or a half percent cut in rates," he said.

But otherwise, I think the way things stand at this moment, I think its a relatively lesser chance of a rate cut unless there is drop in inflation, Mistry noted. However, Parekh said "the worst is over" and there will not be any further rate hikes by the RBI in the near future.