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Below the Quote on Pre-Monetary Policy by Mr. Prashant Pimple, CIO Fixed Income, Baroda BNP Paribas Mutual Fund 

Post the Aug-2024 RBI policy, global assessment has shown that many central banks especially in the west have started cutting rates and this includes  FED's recent pivot in Sep-2024. This comes after declining inflation in major economies and slowing labour market conditions in advanced economies.

Globally, the easing liquidity conditions are reflected in the robust FPI flows and lower rates in domestic markets. Additionally post the JP Morgan GBI-EM inclusion we have witnessed favourable demand supply dynamics in the domestic bond markets, navigating the rates further lower. Domestic rates remained supported by strong fiscal dynamics with upbeat taxcollections and a softening fiscal trajectory.

In the light of the above, improving liquidity conditions both globally and  domestically, and looking at the recent issue of deposit mobilisation by the banks makes us believe that in the October-2024 policy, RBI’s move will be targeted towards supported measures for banks, helping them to garner deposits and benefit from current falling interest rates scenario. In the upcoming policy we expect RBI to disassociate from the interest rate developments globally and take view on the domestic rates based on evolving conditions of domestic
inflation and growth dynamics.

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