BoB chief sees interest rates hardening soon

Rising inflation might put upward pressure on interest rates in the near future, said public sector lender Bank of Baroda (BoB) Chairman and Managing Director M D Mallya.

"Inflation is on the increase and therefore, going forward, one would expect interest rates to slightly harden," Mallya told reporters after launching the bank's life insurance venture India First here today.

India First Life Insurance is a three-way joint venture between BoB, Andhra Bank and the leading British risk, wealth and investment company Legal & General.

Led by high food prices, the overall inflation has been on the rise. The headline inflation rose to a 16-month high of 9.89 per cent in February compared to 8.56 per cent in January. Food inflation came down from 17.81 in the last week of February, but still stood at a high of 16.30 per cent in the first week of March.

 

Analysts and policymakers expect the Reserve Bank to hike its key policy rates in its April policy announcement or even before that to rein in runaway inflation.

Earlier during the day, Morgan Stanley Asia Managing Director Ranodeb Roy also said the RBI may increase policy rates up to 150 basis points during the year to anchor inflationary expectations.

To a query on any possibility of an immediate hike in interest rates by BoB, Mallya said "not at the moment".

Besides, he said the credit offtake remains sluggish.