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Below are Views On RBI Monetary Policy by Lakshmi Iyer, CIO - Debt & Head - Products, Kotak Mahindra Asset Management Company

“RBI maintained the policy repo rate at 4% and reverse repo rate at 3.35%. The MPC also decided to continue with the accommodative stance as long as it is necessary (at least during the current financial year and into the next year) to revive growth and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target. We view the RBI policy statement as dovish despite increase in inflation forecast for H1 as focus remains on growth revival. Bond markets were looking for explicit indications on OMO/OT front, which wasn’t given, hence markets were a tad disappointed. Providing retail investors a direct option to invest in government securities is a good development from a long term perspective. Yields to trade range bound from here on and OMOs to determine support for gsec yields.”

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