Rates to soften in the short term: IDBI

With huge liquidity in the money market, partly contributed by capital flows, the interest rates are expected to soften in the short term, according to Industrial Development Bank of India chairman V P Shetty.

Interest rates have peaked. The Reserve Bank of India (RBI) was likely to use instruments other than rate hike to manage excess liquidity in the system, Shetty said after the bank's annual general meeting on Saturday.

Inflation has shown declining trend for the last four weeks and was hovering in the range that RBI has estimated, he said. It further eased to 4.28 per cent for the week ended June 9 compared with 4.80 per cent for the previous week.

N Venkatesh, managing director of IDBI Gilts, said, "The 10-year paper is already trading at a discount (by 25 basis points) to the coupon rate.

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Agarwal is new chief
Yogesh Agarwal, currently managing director of State Bank of India, has been appointed as chairman and managing director of Industrial Development Bank of India.

He is expected to take charge on July 1. He will succeed V P Shetty who will demit office on completion of term.