Interest rates to remain stable: Kamath

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New Delhi, May 1 (UNI) Interest rates are expected to remain stable in the short term, following the Central Bank's move of raising CRR to 8.25 per cent.

''Liquidity is easy in the market. Interest rates are also expected to remain stable unless there is an economic setback like inflation,'' ICICI Bank Chief Executive Officer K V Kamath told reporters on the sidelines of a conference here.

''The liquidity situation may change but at this point of time, I don't think interest rates will increase,'' he added.

The Reserve Bank of India, on April 29, had raised the cash reserve ratio (CRR) to 8.25 per cent from eight per cent, effective May 24. This was the second time in two weeks that CRR was hiked to tame inflation which is at a three-year high.

Banks would still have sufficient cash after the measures to suck out funds, Mr Kamath added.

The increase in the cash reserve ratio announced April 17 and April 29 will drain a cumulative Rs 27,500 crore from the banking system, according to the RBI.

State-run banks such as State Bank of India and Punjab National Bank also expect the interest rates to remain stable.


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