Lower interest rates will not turnaround the economy: Hemindra Hazari

In a chat with ET Now, Hemindra Hazari, banking expert, shares his views on rate cut. Excerpts:

ET Now: We have seen a rate cut coming in and there will be perhaps another two in the offing depending on the cycle. Will this be an opportune time to buy these sold off levels?

Hemindra Hazari: Your argument would be correct if it says that lowering of the interest rates by about 70 bps or 100 bps will result in a turnaround in the economy. Now my argument is that…

ET Now: Is not that the expectation?

Hemindra Hazari: Lower interest rates will not turnaround the economy. If that was the case, the European Union would have come out of its slowdown many quarters ago. In this kind of demand slowdown, a reduction in the interest rates helps but it does not stimulate the economy to the recovery path.