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Below is the Quote Pre on RBI Credit Policy  by Pankaj Pathak - Fund Manager - Fixed Income, Quantum Mutual Fund.

The RBI is likely to keep the policy rates unchanged and maintain its ‘Accommodative’ stance. The RBI has in past assured the markets that any change in monetary policy direction will be telegraphed in advance. We believe, this is a moment to guide the market for potential rate hikes. The RBI may change the forward guidance to indicate potential rate hikes going forward due to rising inflation pressures. There is also a thin possibility of change in monetary policy stance to ‘Neutral’.  

The RBI will have to revise its inflation forecast for FY23 higher due to rising commodity prices and increase in domestic fuel prices,. In the last policy they estimated inflation to average at 4.5% in FY23. This may get hiked to 5.0%-5.5% band.

The market is positioned for a status quo with slight change in forward guidance. Any change in policy stance or hawkish commentary will push yields higher.

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