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Below is Comment on Pre - RBI Monetary Policy By Pankaj Pathak, Fund Manager-Fixed Income, Quantum AMC

Inflation has come down substantially over the last three months and showing further downward momentum. External conditions have also eased with slower rate hikes in the US. RBI’s foreign exchange reserves have also increased over the last few months. All these developments Reserves should provide comfort to the RBI. We expect the RBI will pause the rate hiking cycle in the February meeting and will maintain the repo rate at 6.25% for extended period. It might also change the policy stance to Neutral.

Bond market should react positively. We expect bond yields to go down gradually though elevated bond supply will limit the downside of yields.

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