Views on Monetary Policy Comittee by Rahul Singh, CIO - Fixed Income at LIC Mutual Fund
Below the Views on Monetary Policy Comittee by Rahul Singh, CIO - Fixed Income at LIC Mutual Fund
"The MPC has turned decisively hawkish, raising the repo rate by 25 bps to 5.50% and shifting its stance to calibrated tightening, effectively taking near term rate cuts off the table. The move reflects growing concerns around inflation, with higher crude prices, monsoon risks and currency weakness, prompting the RBI to raise its FY27 CPI forecast to 5.2%.
While policy tightening may have limited impact on supply driven inflation, the RBI is clearly focused on anchoring expectations. At the same time, stronger growth projections at 7.1% for FY27 provide room to prioritise inflation. Liquidity is likely to remain in surplus, though absorption measures are expected to continue. Overall, the policy reinforces a higher for longer rates outlook, with the bias tilted towards further tightening if inflation risks persist."
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