With inflation coming under control, Reserve Bank of India (RBI) may cut interest rates further by 75-100 basis points in 2015, but challenges may appear in form of strengthening of rupee due to global fund flows, eminent banker Uday Kotak said.
“My estimate is that RBI may ease rates by 75-100 basis points more in the calendar year 2015.
“That is the total rate cut I see coming ahead,” said Kotak, who was here to attend the World Economic Forum (WEF) Annual Meeting.
Asked whether the base-effect was still at play in inflation being at low levels, the Kotak Mahindra Bank chief said, “I think inflation is pretty much under control now.”
Kotak, who has been a regular at the WEF summits in Davos, also said the big stimulus from European Central Bank is going to have a significant impact for global flows positively and Indian markets may also get greater flows.
“But, strengthening of our currency will be a challenge,” he added.
Asked whether Indian markets would get larger flows that the record-high levels of last year, Kotak said, “There is a good chance.”
“The key issue is if these flows come and the currency strengthens, how do we make sure that we are able to ‘Make in India’ and manage a strong currency,” he added.
The five-day WEF meeting ended last night with a record participation of over 2,500 global leaders, including over 100 from India.