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Below are Quote on RBI Monetary Policy announcement by Murthy Nagarajan, Head-Fixed Income, Tata Mutual Fund

“RBI has re iterated its commitment to support durable growth in the economy. For the orderly evolution of the yield curve, RBI has committed 1 Lakh Crores of  buying G Sec in the first quarter ( GSEC acquisition programme) . The first tranche was announced of  Rs 25000 crores  on 15^th April 2021. At the same time, it has stated CPI inflation continues to be a problem with this year CPI  inflation expected to be around 5 % levels. Given the heavy borrowing programme, it will be interesting to see how the investors bid in the auction as they have lost money and global yields are on a upward trajectory. RBI has also stated it does not have a specific levels in its mind when they are doing OMO, so it will be on market players to determine the levels at which they are comfortable buying in the auctions. However, with these measures, RBI measures should be able to counter the global adverse backdrop of upward movement in  yields and higher commodity prices. The increase in Long term repo operations over 15 days could see the upto one year yields moving up by 10 to 15 basis points and remaining at that level.”

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