Comments
Rahul Goswami, CIO-Fixed Income, ICICI Prudential AMC, on Tuesday said that the Reserve Bank of India has maintained its stance of tempering inflation by maintaining status quo on repo rate and reducing the cash reserve ratio by 25 basis points.
“RBI has a tightrope to walk on of managing inflation and growth. As the government’s reform actions translate to moderation of the twin deficits, RBI will get significant headroom to initiate aggressive monetary easing which can come as early as the first quarter of calendar year 2013,” he said.
Though the current move might pose short-term challenges for the bond market, however, the trajectory of long-term yields would remain southwards, he said.
According to Arvind Chari, senior fund manager (debt), Quantum Asset Management Company Ltd, rate cuts by RBI seem probable only in the January policy as headline inflation readings in the next two-to-three months are likely to shoot up further from current levels.
“This will take bond yields higher from current levels as November is a heavy supply month. Bond markets now look to open market operations for support. Systemic liquidity, adjusted for government balances is not that bad, and the 25 basis points cut in CRR will further cushion liquidity keeping short-term interest and corporate bond yields benign,” he said.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.