Amid the chorus for an interest rate cut from the Reserve Bank of India in its forthcoming monetary policy review on Tuesday, Keki Mistry, vice chairman and CEO of HDFC Ltd said that the central bank may wait for one more policy before going for a rate cut. In an interview to Sandeep Singh, Mistry said that going further, rates could be cut by up to 100 basis points . Excerpts:
While oil prices have slipped and GDP growth is down to 5.3 per cent, do you see RBI going for a cut in interest rates now?
RBI will certainly start cutting the rates but not now. While there may be a cut even on Tuesday, I personally feel that they would wait for one more month and see how the inflation numbers show up. Based on it they may do it in the next policy review meeting.
How much interest rate cut do you see over the next one year?
If everything else remains in line, I think by December 2015 there should be a rate cut between 50-100 basis points.
How do see that affecting the housing market which has seen a slowdown?
There was never a slowdown, it has been business as usual. But certainly with the economy looking to pick up, it will lead to higher activity in the sector and more demand for housing.
How do you see India positioned currently?
From a global standpoint, India is in a sweet spot. Commodity prices, oil prices and inflation are down and everything that one would like to see from a macroeconomic perspective on India is happening now, and people are looking at India with tremendous amount of interest. China is slowing down and Russia and Brazil too are not doing well but India is ready to go at a different platform. Nobody is expecting that we will start growing at 7 per cent in a hurry. People are willing to wait for it.
Do you see a pick up in the investment cycle now?
The economy is on the right track and business sentiments are at an all time high and people in business are now looking to invest. While there are some who still have excess capacity there are many who are now looking to invest. It is only a matter of time that the investment cycle will pick up and people will start investing in plant and machinery.