Why the bond market is not buying RBI’s friendly monetary policy
Liquidity still tops the list of concerns for markets, and the absence of a clear stance on this disappointed bond traders and bankers
This explains to a large extent why bond yields inched up and the rupee fell vs the dollar after the RBI policy announcement
Mumbai: Repo rate cut? Check. Inflation forecast lowered? Check. Growth forecast lowered? Check. As monetary policies go, Thursday’s statement had all the elements that showed the Reserve Bank of India (RBI) wants to grab this interlude on inflation and won’t hesitate to cut rates further to spur growth. After all, by their own forecast, headline inflation is likely to remain below the 4% target for two consecutive years now.
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