"Interest rates are likely to remain soft"

 Binay Chandgothia, Fund Manager, Principal Income

 

  What is your outlook on interest rates? Will an economic recovery lead to an increase in rates?

 We expect interest rates to remain soft in the near future as forex inflows continue to be strong and the RBI maintains its soft-rate stance. There is enough liquidity in the system.

 While economic recovery is underway, the pace of growth of industrial production is not strong enough to improve credit demand.

 Besides, the working capital cylces of Indian corporations have become more efficient. We do not see an immediate reversal in the forex inflows trend.

 We also do not see any shift in the RBI's stated policy on interest rates