Author: Anurag Bhullar
There is a wide view in the financial circles that interest rates are unlikely to make a downward trend anytime soon. Recent reports by various banking institutions including ICICI propagate this view.
Stability in interest rates can be seen but the chances of its easing down presently are somewhat difficult. The present scenario of firm nature of interest rates is basically the mix of factors which include a number of hikes in Cash Reserve Ratio by 25 basis points and Repo rate (short term lending rate) by 50 basis points initiated by RBI in order to restrain the all time high inflation rate. In response to these changes, commercial banks have also raised their benchmark lending rate.
The high interest rates are bit of concern for companies; as it has largely affected the costs of borrowing funds and availability of sufficient amount of capital for companies that is automatically leaves a bad impact on the economic growth rate of the country.
But analysts have not declined the fact that once inflation comes down a bit and a slide in oil prices takes place in the future, there is a good probability that interest rates of banks will also ease up. A bare minimum time period of six to nine months is considered as appropriate to get the things under control. |
