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Below the Quote on MPC Policy by Basant Bafna, Head – Fixed Income, Mirae Asset Investment Managers (India) Pvt. Ltd

“The MPC policy was broadly in line with expectations, but the more significant takeaway lies in the measures announced around foreign capital flows, external borrowing and forex management. The bond market's reaction reflects this clearly. While government security yields softened by around 4 basis points, corporate bond yields declined nearly 25 basis points, indicating that markets are responding more to the structural measures than to the policy stance itself.
Over the last two years, policy rate cuts have not fully translated into lower market borrowing costs for corporates and PSUs, largely due to supply pressures in the domestic debt market and strong credit demand from the banking system. The latest measures could help address this imbalance. Lower hedging costs and improved overseas borrowing conditions may encourage PSUs to access international markets, reducing domestic supply and supporting lower bond yields.
The policy also reinforces confidence in India's macroeconomic position. Growth remains among the strongest globally despite some moderation, while inflation continues to stay within the RBI's target band. Alongside FCNR and forex-related initiatives, the measures reflect a balanced approach towards supporting growth, maintaining stability, strengthening the external sector and creating a constructive outlook for the bond market. Overall, the policy reflects a balanced approach towards supporting growth, maintaining inflation discipline and strengthening the external sector.”

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