By Dr. Poonam Tandon, Chief Investment Officer at IndiaFirst Life Insurance for your kind perusal.
The Monetary Policy Committee has finally changed the stance of the Monetary Policy to “neutral” from withdrawal of accommodation” with all members voting for it. This has been expected by the markets for a very long time. The Governor has however cautioned that there may not be a rate cut in the following policy. It just increases the flexibility of the MPC to cut the rates and also monitor the situation both national (inflation and growth) and international (geopolitical tensions, US elections and Federal Reserve decisions). The Governor has also kept the growth rate intact at 7.2% for FY25 and the inflation target at 4.5%. The 10 yr G-sec yields have softened by 7bps to 6.74% on this news. On the whole the Policy was a very balanced one and one can expect a rate cut in the near future.
