Comment on RBI Monetary Policy Reaction by Naval Kagalwala, COO & Product Head at Shriram Wealth Ltd
Below the Comment on RBI Monetary Policy Reaction by Naval Kagalwala, COO & Product Head at Shriram Wealth Ltd
“Post the 100-bps cut in the Repo rate and the reduction in CRR to 3% (by end 2025) in the June'25 monetary policy, the RBI today, in line with expectations, maintained status quo with no change in the Repo rate and continuing with the Neutral stance. While the inflation is expected to be in line with RBI’s 4% target for now, the expected 4.4% terminal rate and a forecast inflation of 4.9% in the April-June 2026 quarter reduce the possibility of further rate cuts. The growth forecasts remain unchanged, but this will be reviewed basis the tariff discussions and its possible impact.
We continue with our outlook that the short/mid end of the corporate bond yield curve will continue to outperform due to a mix of liquidity and good spreads vis-à-vis G-secs. We suggest investors to look at funds investing in high rated bonds maintaining duration of 2 to 4 years. This includes categories such as Corporate Bond funds, Banking & PSU funds, Short Duration and Target Maturity funds.”
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