Quote on MPC by Mr. Umesh Sharma, CIO Debt, The Wealth Company Mutual fund
Below the Quote on MPC by Mr. Umesh Sharma, CIO Debt, The Wealth Company Mutual fund
The MPC kept the repo rate unchanged while revising macro forecasts more favorably. FY26 real GDP growth is upgraded to 6.8% from 6.5%, supported by resilient rural demand, gradual urban consumption recovery, strong government spending, and sustained investment momentum. Above-normal monsoons and healthy reservoirs are expected to boost rural demand, while GST rationalization, favorable financial conditions, and rising capacity utilization should support broader domestic demand and investment. Risks from trade and tariff uncertainties may weigh on external demand, leading to higher Q1-Q2 FY26 growth but lower projections for Q3, Q4 FY26, and Q1 FY27.Inflation outlook is more benign, with FY26 projection reduced to 2.6% from 3.1%, and core inflation expected to remain contained. The MPC sees space to support growth but will assess transmission, fiscal impacts, and trade uncertainties. The policy is dovish, with two external members favoring an accommodative stance, suggesting potential for more than a 25-bps cut in future reviews. Market reaction was initially negative, with the 10-year yield at 6.6%, later moderating to 6.53%. Key banking sector regulatory developments are expected to boost credit growth and deepen financial infrastructure.
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