Mumbai: While surprised last month when the Reserve Bank of India did not raise interest rates, bankers now say the weak industrial growth data indicates the central bank may leave them untouched.

“There are slimmer chances of rate hike, now that the slowdown trend is building up. However, I expect (GDP) growth to be below 8%. RBI has a problem with growth slowing down and inflation likely to stay above 7% for sometime,” said A Prasanna, vice-president - fixed income, ICICI Securities.

Industrial output growth fell to a six-year low of 3% in March. The market is now pricing the expectation that RBI won’t raise interest rates because of the renewed risks to economic growth.

Many bankers now expect lending rates to come down in the next six months, if inflation starts to ease as projected by the central bank. “I expect lending rates which are stable now, should come down in the next six months when inflation will be under control,” S A Bhat, chairman and managing director, Indian Overseas Bank, said.

Source : DNA