HSBC India expects a pause on interest rate movement from RBI

Ahead of Wednesday’s RBI Monetary Policy decision, experts remain divided over the possibility of yet another rate cut, but most are expecting greater clarity on the one-time loan restructuring plan. Hitendra Dave, Head of Global Banking & Markets of HSBC India joins in a conversation with CNBC-TV18.

“My sense is RBI has done quite a bit in March and April and in the intervening period while we have all been in the lockdown and I think RBI has always mentioned the timing of the cut is as important as the actual decision,” Dave told CNBC-TV18.

For now, the RBI should take a pause on the rate cut, Dave said, while maintaining an accommodative stance.

“On interest rate per se, I would think the best course of action would be a pause, but with a statement that we stand ready to do more as we get more incoming data on growth, inflation etc.”

He further added, “We should not rule out that the unconventional measures TLTRO etc. have actually had as much of an impact on yields as rate cuts themselves. People don’t realise that loans are now at the lowest rates that I can recall in the last 10 years, so it is benefiting a very wide section of the economy.”