By Mr. Prashant Pimple Chief Investment Officer – Fixed Income, Baroda BNP Paribas Mutual Fund
“The RBI‘s six-member Monetary Policy Committee voted unanimously to raise the benchmark repo rate by 25 basis points to 5.50%, the first hike in nearly four years. The MPC also shifted its policy stance to “Calibrated Tightening” from “Neutral”. Gsec yields reacted negatively across the curve by approximately 3-5 bps as the stance shifted to calibrated tightening. The shift to calibrated tightening signals further hikes ahead, though the pace will depend on domestic inflation factors and global geopolitical ramifications. In the near-term we expect pressure on bond prices as yields adjust to the tighter path going ahead.
RBI increased the GDP forecast for FY 27 considering better FY 27 Q1 GDP numbers and raised CPI forecast for FY 27 witnessing ongoing pressure on fuel and expected impact on food due to deficient monsoon. ”