Uday Kotak red flags inflation pressure on rate cycle

India's first billionaire banker Uday Kotak today indicated that if inflation reaches the 5% mark it would mean the end of the interest rate easing cycle.

The RBI Governor Urjit Patel yesterday waved a red flag on inflation pressures that signalled the end of lower borrowing costs for customers.

India's consumer price inflation inched up to 3.65% in February from 3.17% in January as food prices started rising.

In a tweet Kotak also said that interest rate bottoming out would mean good news for savers as they may expect higher returns on deposits from banks.

"RBI policy: Watch inflation. If 5% soon, interest rates bottom. 10 yr 6.75/7%? Good for savers, global flows. ?62/65? What bout exports, jobs?," Kotak tweeted.

The billionaire banker also signalled that if rupee stabilises around the Rs 62-65 mark it would mean trouble for the export sector which has reaped the benefit of a depreciating rupee over the last couple of quarters.

If the Indian rupee becomes uncompetitive then it would spell trouble for the IT and textile sector which generates a lot of jobs, Kotak implied.