The Hindu Business Line : RBI may not hike key rates: Kidwai

New Delhi, Oct. 26 HSBC India Group Chairman and country head, Ms Naina Lal Kidwai, said though the RBI is concerned about the rising inflation, the central bank may not hike key rates in its mid-term review of monetary policy on Tuesday as the economy needs stimulus packages till it recovers from the financial crisis.

“The (RBI) Governor is clearly concerned about inflation, but I think he fully understands that having expansionist monetary policy has been important to provide the stimulus we need,” Ms Kidwai told reporters on the sidelines of Microfinance India Summit here on Monday.

“Personally, I expect the rates to remain flat. Besides, the RBI does not need to wait for credit policy, it can revise (key rates) at any time when the need arises.

“I think it is important that the stimulus continues. The measures are showing good results now, and yanking it at this stage may create its own issues.”

Rate change

The country is likely to grow at around 8 per cent in the fiscal ending March 2011, she said.

Ms Kidwai said the RBI is likely to start hiking interest rates by the year-end because by then there would be more pressure on interest rates.

Mr Mark T. Robinson, CEO, Citi South Asia, said: “For this fiscal, we are assuming India’s GDP growth at 6 per cent. I see estimates saying between 5.8 per cent and 6.5 per cent. The next fiscal would see higher growth. Most countries around the world will die to have debates whether 6 per cent growth is too high or too low. The outlook for India is quite positive. There is a lot of attention given to Indian market by investors over the last 6 months or so,” he said.

On RBI’s policy review, Mr Robinson said, “As a newcomer to India, I am extremely impressed by the efforts that the RBI makes to solicit inputs from the business community and the financial sector as they develop their approach to the economy. I definitely think it is a very good thing.”

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