Comment on RBI MPC by Puneet Pal, Head-Fixed Income, PGIM India Mutual Fund
Below the Comment on RBI MPC by Puneet Pal, Head-Fixed Income, PGIM India Mutual Fund
“The MPC delivered a hawkish monetary policy today as it changed its monetary policy stance to "Calibrated tightening" while increasing the policy repo rate to 5.50% today. While the 25bps rate hike was fully priced in by the markets, opinions were divided on any change in the monetary policy stance. The Governor's statement emphasising that average Inflation of 5.80% over the next 3 quarters with "core" inflation projected at 4.40% needs policy recalibration reinforces the hawkishness. We continue to expect incrementally 75-100 bps of rate hikes over the next 9 months and also expect RBI to keep withdrawing banking liquidity using various tools at its disposal.”
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