RBI Oct policy review to decide interest rate trend: ABN Amro

An expected fall in inflation post-October and the Reserve Bank's mid-term policy actions might prove decisive in deciding the future course of lending rates, top executive of a foreign lender said today.        

"We have to see the October policy of the Reserve Bank (to know the interest rate movements)...Crude price is coming down and a good monsoon may help bring down food prices which would help in cooling inflation after October," ABN Amro's Country Executive Meera Sanyal told reporters here.        

Several banks hiked their interest rates after Reserve Bank raised its cash reserve ratio (CRR) and repo rate by 1.5 per cent and 1.25 per cent respectively since April last in a bid to check inflation, now at a fresh 13-year high. Inflation crossed the psychological 12 per cent-mark last week.        

Sanyal said despite softening global crude oil prices, inflation rate in Asia's second fastest-growing economy was likely to touch the 13-14 per cent-mark by October.        

"Inflation is likely to touch the 13-14 per cent mark by October, but it may soften after that."        

"It should come down post-October," she said, adding given the good monsoon expectations, there are already signs of food prices coming down.        

Corporate, wealth management and small and medium enterprises (SME) segments continue to be the key-focus areas of ABN Amro's Indian operations and the pipeline for FY 09 remains strong, she said.        

On corporate growth, Sanyal said in the medium-term, there may be some slowdown, "but in the longer-term, it will remain robust".