IGI Logo

Below is quote on Monetary Policy by Gurvinder Singh Wasan Senior Fund Manager and Credit Analyst - Fixed Income, JM Financial Asset Management

RBI hikes 50bps –In the midst of Global Monetary Storm to control Inflation.

Globally the markets have been facing headwinds over last couple of years in the form of pandemic, geo-political situation and recently storm in the global monetary actions. Acknowledging the same, the RBI hiked Repo rate for fourth consecutive time in last 5 months by 50 bps to 5.90% mainly to address rising inflation and to curtail inflationary expectations. RBI also decided to remain focused on its stance of withdrawal of accommodation to ensure inflation remains within target going forward, while supporting growth. In light of global uncertainties, RBI decided to lower its growth forecast from 7.20% to 7% and maintains its inflation forecast to 6.70% for FY ‘23. Further actions by RBI will depend on incoming data and evolving scenarios.

As the policy was on expected lines, markets remained relatively flat post policy. Considering H2 FY 23 calendar announcement we witnessed slight steepening in the yield curve with 5Y Gsecs yield moving down and 10Y Gsecs staying flat at ~ 7.35%. Till clarity on bond inclusion emerges, we expect bonds to take cues from global events.

Above views are of the author and not of the website kindly read disclaimer