Parekh hopes RBI will take a break from rate hike spree

HDFC Chairman Deepak Parekh has said he hopes the RBI would maintain status quo on rates during its monetary policy review scheduled for later this month to maintain a balance between growth and inflation.

"I don't think the Reserve Bank will look at another interest rate hike because we need to have a balance between growth and inflation," he told reporters on the sidelines of an event here last night.

"I hope we get a breather before the next round of hike in interest rate...I hope the Governor of RBI does not do anything (hike rates) in July."

Since March 2010, the central bank has upped its key rates ten times, with the latest being 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.

One could draw comfort from the declining trend in food inflation, the top financial sector expert said, adding this would help RBI to keep the key interest rates unchanged.

"I think inflation is settling down. The numbers that have come out on food inflation is certainly down, which is very hopeful."

After a month-long uptrend, food inflation plunged to a 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.

On HDFC Bank increasing its interest rates, Parekh said it was not on the cards at the moment.

On the e-auction of land, Parekh said, "the 'Land Acquisition Bill, 2007' is still pending before Parliament. I hope that in the monsoon session it is taken up because it has been in waiting for the last 3-4 years."

It may be recalled that Parekh had said in his annual letter to the shareholders on compulsory implementation of e-auction for land transactions and a special 'Settlement Commission' for now scrapped Urban Land Ceiling & Regulation Act (ULCRA) related-cases.

"These baby steps will go a long way in alleviating the housing problems in India," the finance sector veteran had said in the letter.