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| Indian consumers not hopeful of more interest rate cuts |
| Press Trust of India / Mumbai Jun 27, 2009, 10:46 IST |
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Despite inflation hovering in the negative territory, Indian consumers feel that banks are unlikely to slash lending rates over the next one year, according to a survey.
As inflation has declined somewhat over the last two quarters, providing greater room for interest rate cuts, the emphasis of policy-makers has gradually shifted from combating inflation to propelling economic growth.
"Acknowledging the role that lower interest rates can play in economic recovery, the Reserve Bank of India (RBI) believes that there is room for banks to reduce their lending rates further and expand their credit," Boston Analytics said in its monthly Consumer Confidence Survey.
"While consumers feel as though interest rates have definitely come down, they have expressed pessimism that they will continue to fall further over the next 12 months," it said.
The combination of declining optimism about future interest rates, job insecurity, uncertainty about borrowing, and pessimism about the state of the economy has lead to weaker purchase sentiment, it said.
"Overall the last few months, there has been a drop in respondents reporting likeliness of committing to big ticket purchases in sectors like durables or white goods, automobiles and home purchase," Boston Analytics said.
It derived the data from a monthly survey targeting 10,000 respondents across fifteen Indian cities.
A stratified sampling process was adopted for this survey, with the strata based on the socio-economic conditions of the respondents in order to ensure a proper representation of the population.
Boston Analytics is a provider of actionable research and analysis to its corporate, consulting and financial clients.
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