NEW DELHI: Interest rates are expected to fall over the next few weeks after finance minister P Chidambaram on Friday expressed his "wish" that lending and deposit rates be cut by 50 basis points.
He also issued an "advisory" to chiefs of PSU banks to focus on lending to the consumer goods sector — both durables and non-durables — in a bid to prop up consumption and production, which have been dropping for the last few months.
"It is important to focus on both investment and consumption... There has been some sluggishness and that is why this advisory," Chidambaram said after meeting chiefs of public sector banks.
While the advisory is expected to make car loans and financing for purchase of consumer goods cheaper, what happens to home loan rates was unclear. Though the minister indicated that the need to moderate home loan flows was no longer required, he was not as candid on the issue. But the overall message was clear: interest rates need to dip.
"If monetary policy is also supportive, it is possible to look forward to stable, and perhaps some moderation, in interest rates," he said ahead of RBI's quarterly policy review.
With public sector banks, which account for nearly 7% of the market, cutting rates, private players would have little option but to follow suit.
He also issued an "advisory" to chiefs of PSU banks to focus on lending to the consumer goods sector — both durables and non-durables — in a bid to prop up consumption and production, which have been dropping for the last few months.
"It is important to focus on both investment and consumption... There has been some sluggishness and that is why this advisory," Chidambaram said after meeting chiefs of public sector banks.
While the advisory is expected to make car loans and financing for purchase of consumer goods cheaper, what happens to home loan rates was unclear. Though the minister indicated that the need to moderate home loan flows was no longer required, he was not as candid on the issue. But the overall message was clear: interest rates need to dip.
"If monetary policy is also supportive, it is possible to look forward to stable, and perhaps some moderation, in interest rates," he said ahead of RBI's quarterly policy review.
With public sector banks, which account for nearly 7% of the market, cutting rates, private players would have little option but to follow suit.
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