State run, Union Bank of India has decided to stay away from interest rate hikes for sometime.

As the soaring inflation rate is showing a downward move for three consecutive weeks, the bank is holding back to raise interest rates for the time being. Chairman and Managing Director of Union Bank, M V Nair said, "We are not interested to raise interest rates for the time being."

The series of increase in repo rate and CRR by RBI to curtail inflation had resulted in hardening of the interest rates.

Mr. Nair feels that currently there is no pressure on the interest rates as inflation is cooling down and crude oil prices are declining.

HDFC Chairman Deepak Parekh also thinks the same and said, "I hope interest rates have peaked. With inflation moderately coming down, I hope there will be no need for a further interest rate hike."

Although there was a feeling that already soaring interest rates would go up by another 0.5 percent yet the Bank feels that interest rates should stabilize in the coming times.

The annual rate of inflation stood at 12.10% for the week ending August 30, down from 12.34 percent for the previous week.

If with slowing growth and declining oil prices inflation is likely to come down over a period of six months or so, the best policy may be to not raise interest rates any more says the new governor of RBI, Duvvuri Subbarao.

Lower inflation numbers for the last three weeks had breathed new lease of life to the banking sector.