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Below the Quote on MPC Commentary by Basant Bafna, Head - Fixed Income, Mirae Asset Mutual Fund

"The RBI MPC outcome is in line with our as well as consensus expectations and represents a watchful approach with robust flows on the positive side amidst external headwinds, the Middle East conflict, tightening global financial conditions and El Niño-related risks.

On the currency side, the FCNR/ECB mechanism is worth noting - as the underlying mechanism involves the forex flows accruing to RBI, rupee liquidity has seen some green shoots with partial offset on account of preponement of forward maturities. With dollar flows accruing to the regulator, movement on USD/INR remains dependent on active intervention by RBI rather than the volume of flows.

On the liquidity front, RBI has continued to reiterate its emphasis on maintaining adequate liquidity and supporting credit transmission with flows on account of the above initiatives. As the flows have resulted in improved liquidity, overnight rates have trended towards the lower end of the LAF corridor with a fall below the LAF corridor over the past couple of days.

On the rates front, markets were anticipating a status quo with a close watch on anticipated measures to absorb liquidity going forward. As RBI continued to emphasize on ensuring adequate liquidity for markets, market reaction to the policy was positive with Money Markets falling by ~ 10 bps and Corporate Bonds by 3-5 bps. As Government Securities curve had already priced in a status quo in terms of policy rates, yields had already fallen by 4-5 bps heading into the policy with yields remaining stable thereafter.

Going forward, the bar for a rate hike appears high, and would likely require evidence of broad-based, second-round inflationary pressures rather than transient spikes in oil and food prices. Today's policy also reaffirms that the central bank remains anchored to domestic inflation and growth dynamics, with rising rate-hike expectations from developed-market central banks having only a limited bearing on its own policy calculus. On liquidity, the system is expected to continue to remain in surplus resulting in lower market borrowings for banks as well as PSUs on account of FX flows.

As such, the overall view on Fixed Income remains constructive going forward."

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