The year 2011, which witnessed robust hike in the lending rates is about to conclude. The expectations are high that in year 2012 the interest rate cycle will reverse and the borrowers will have a breath of relief.
In a bid to control inflation, the Reserve Bank of India adopted the strategy of hiking policy rates which lead to a substantial rise in the lending rates. In the recent monetary policy review the rate were kept unchanged. It marked an end to the policy rate hike spree, which stared from March 2010.
In the mid-quarterly review of monetary policy, RBI said, “While inflation remains on its projected trajectory, downside risks to growth have clearly increased... Further rates hike may not be warranted.”
Governor of RBI, Mr. D. Subbarao said, “I cannot really speculate on when we might start cutting rates, but that is an event, that an action that is on the way forward.” “I expect interest rate to start bottoming out from March 2012,” said Mr. Robin Roy, Associate Director at PwC.