Interest rates will go up: Jyoti Jaipuria
The interest rates will go up because what we had is like a monetary tightening.
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| ET Now caught up with Jyoti Jaipuria, Head, Research, BAS-ML to know his views on interest rate hike.
What's your outlook on the interest rate front? There is all this talk about rolled back stimulus that may even begin starting at this budget with the excise cuts there but kind of impact particularly on the auto sector that you foresee?
The interest rates will go up because what we had is like a monetary tightening. My sense is that interest rates will start moving up only the later part of the year, which is like from a borrow point of view and I would guess by next March will probably be 8200 basis points higher than where we are today but at the same time if you have income levels, which move up, then the demand tends to continue because when income levels are rising and second is more stability on the income, which you are going to earn.
People borrow even at higher costs that's when they start spending. So that phenomenon will play out and so we will still see strong auto demand, though the numbers on a year on year basis will start weakening as we move into the year just because of the base effect we have the last year.
But are you expecting a further hike in rates then considering that inflation is already above 7%?
There are two rates I guess one can look at, one is what the RBI announces their rate and the other is the rate, which the bankers charge to the customer, so rates, which bankers charge to the customers, what they will charge for auto loans, what they will charge for housing loans and corporate loans, those will start rising from September, those have still not started rising at all. So from September or some period around there is when you will start seeing an increase in those days.
What's your outlook on the interest rate front? There is all this talk about rolled back stimulus that may even begin starting at this budget with the excise cuts there but kind of impact particularly on the auto sector that you foresee?
The interest rates will go up because what we had is like a monetary tightening. My sense is that interest rates will start moving up only the later part of the year, which is like from a borrow point of view and I would guess by next March will probably be 8200 basis points higher than where we are today but at the same time if you have income levels, which move up, then the demand tends to continue because when income levels are rising and second is more stability on the income, which you are going to earn.
People borrow even at higher costs that's when they start spending. So that phenomenon will play out and so we will still see strong auto demand, though the numbers on a year on year basis will start weakening as we move into the year just because of the base effect we have the last year.
But are you expecting a further hike in rates then considering that inflation is already above 7%?
There are two rates I guess one can look at, one is what the RBI announces their rate and the other is the rate, which the bankers charge to the customer, so rates, which bankers charge to the customers, what they will charge for auto loans, what they will charge for housing loans and corporate loans, those will start rising from September, those have still not started rising at all. So from September or some period around there is when you will start seeing an increase in those days.
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