Ahead of the monetary policy review due on Wednesday, PNB after SBI has increased rates on its bulk deposits of over Rs. 1 crore to 5%, making an increase of 50 basis points as against SBI which brought about an hike of 100 basis points or 1% across all maturities on all such deposits.

In its previous policy review meet, the RBI maintained the status quo at 6%.

The interest rate increase is reflective of the exhaustion of liquidity which saw huge bouts in the system post demonetisation phase.

Liquidity condition is set to tighten and with steep valuations, stock prices are likely to return to reasonable valuations.

Interest rates are unlikely to go down, though there are chances of rate hike going forward.

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