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Below is View on Monetary Policy August, 2022 by Lakshmi Iyer, CIO (Debt) & Head Products, Kotak Mutual Fund

“RBI MPC voted unanimously hike repo rate by 50 bps to 5.4% - taking to pre pandemic levels. RBI MPC is line with our expectations. Inflation seems to be at the forefront of the move as they maintained CPI forecasts intact at 6.7% for FY 23. To us, this means we are not done with rate hiking cycle yet and we could brace for continued northward journey in rates. Withdrawal of accommodative stance has been maintained. We see this as a  “no dovish”  undertone policy contrary to markets expecting a dovish stance. Bond markets would now focus on incremental gsec supply and take cues from global bond yields going forward. Staggered investment approach in fixed income stays.”

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