Quote on Monetary Policy by Churchil Bhatt, Kotak Mahindra Life Insurance Company
Below is quote on Monetary Policy by Churchil Bhatt, Executive Vice President & Debt Fund Manager, Kotak Mahindra Life Insurance Company Limited
With a 50bps policy rate hike, the MPC has delivered just what was expected by financial markets. Inflation projection for FY23 was kept unchanged at 6.7%, while GDP growth projection was revised marginally lower to 7%. However, in spite of the policy rate hike, the stance of policy remains as “withdrawal of accommodation”. This leads us to believe that in light of domestic inflation situation, the MPC will continue with further policy rate tightening. However, India’s inflation problem is far more benign and manageable in comparison to what most of the world is facing. Hence, markets may take comfort in the fact that the future policy tightening by RBI will be relatively unhurried. While RBI remains vigilant on the currency front, it expressed comfort on the external front owing to India’ stable macros and comfortable forex reserves. With the no-surprise policy out of the way, domestic rates market will now focus on global factors and prospects of India’s inclusion into Global Bond Index. We expect 10Y Government Bond to trade in 7.25%-7.50% band in the near term
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