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Below is perspective on RBI MPC Policy Direct Scheme By Mr. Nitin Shanbhag, Sr. Executive group VP- Motilal Oswal Private Wealth.

“Policy rates remaining unchanged indicates that RBI is more focused on domestic macro variables rather than tracking global central bank actions. While the US Fed has clearly indicated multiple rate hikes going forward to combat rising inflation, the RBI seems far more calibrated in approach given its own projection of domestic CPI peaking in Q4FY22 and moderating in FY23. On the external front, the projection of CAD at 2% of GDP is also positive. Although bond yields will take a breather for now, with the RBI continuing on the path to normalization, we maintain that the yield curve is likely to flatten going forward. Hence, for core fixed income allocation, a barbell approach i.e. having core allocation to high quality accrual oriented funds with short maturities (3-5 years), complemented by 20-30% allocation towards long maturity and high quality roll down strategies, would remain the preferred strategy.”

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