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Below are view on Pre RBI Policy expectation by Pankaj Pathak, Fund Manager-Fixed Income, Quantum Mutual Fund

It is going to be a neutral policy with no change in stance or policy rates. However, the RBI may highlight the current inflation trend as a risk to the existing easy monetary policy.

From the market standpoint, we do not expect any exceptional move in either direction. Bond yields have already moved up in the last few weeks, factoring in some hawkish tilt in this policy.

There are signs that elevated inflation numbers in the past 4-5 quarters have started to fuel inflationary expectations. This pressure could increase substantially as the economy opens up, possibly by the end of the year or early next year. Thus the RBI is running a risk of misjudging the inflation threat. Remember, this had happened after the global financial crisis and caused significant damage to growth momentum then.

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