Quote on Monetary Policy Committee by Mr. Vikas Garg, Head of Fixed Income, Invesco Mutual Fund
Below the Quote on Monetary Policy Committee by Mr. Vikas Garg, Head of Fixed Income, Invesco Mutual Fund
“The first MPC meeting under the new Governor delivered a unanimous rate cut of 25 bps after almost five years, in line with market expectations. The commentary on inflation is benign, particularly regarding food prices, with FY26 headline inflation projected to moderate to 4.2%. The outlook for FY26 growth remains upbeat at 6.7%. The stance has been retained as “Neutral,” citing global uncertainty. While there were no major announcements on further liquidity measures, which may disappoint the market slightly, the readiness to proactively provide liquidity is reassuring. There is also more flexibility on currency movement due to market conditions. Overall, this is a well-balanced policy that meets market expectations for the third consecutive time. The new MPC’s more flexible approach to the inflation trajectory under the inflation targeting framework provides room for further rate cuts, even as the MPC remains data dependent. A fiscally prudent budget and the onset of the rate cut cycle set the stage for domestic market yields to come down.”
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