Amit Somani, Deputy Head – Fixed Income, Tata Asset Management
“RBI delivered a Status Quo policy by keeping policy rates on hold. The stance is kept at Neutral. Only one member, now, retained the view of changing the monetary policy stance from Neutral to Accommodative. FY26 CPI Inflation outlook has been retained at similar levels as last policy at 2.1%, while 1H27 inflation has been revised marginally higher to 4.1% due to increase in prices of precious metal. GDP Forecast for 1H27 has also been revised upwards to 7% from 6.8% earlier, aided by recent comprehensive trade pact with the EU, trade deal with The US etc.
While RBI did not announce any explicit policy measure for liquidity, RBI re-emphasized keeping ample liquidity to support economic activity. We expect RBI will continue to conduct Liquidity operations in a way that will keep overnight rate closer to the policy rate.
The upward revision of Inflation and GDP Growth forecast gives hawkish tilt to the policy and indicates monetary policy easing is largely behind us. We expect 10-yr G-sec to trade in 6.60% – 6.80% range in near term. Short-term yields are likely to remain in higher range with 1-year CDs trading in 6.85%-7.25% levels on account of significant pick-up of bank credit growth in Q4.”