RBI monetary policy reaction: Future Generali India Life Insurance

10 Feb 2022 , 02:01 PM

“Overall an Ultra Dovish Policy with an overarching focus on ‘’Durability of Growth”. The dovish verdict comes at a time when the MPC is juxtaposed with a higher than expected government borrowing in FY23 and has chosen to stay put and not react to the incumbent global and domestic pressures warranting for maneuvering of the monetary policy.

Belying the market expectations of a reverse repo rate hike, MPC has continued with its effective stealth tightening by way of Variable Rate Reverse Repo (VRRR’s) and has chosen to preserve its ammunition for later, and play the waiting game for now.

While the lower Inflation forecasts coupled with the accommodative status quo have imparted short-term respite to the reeling bond markets post the Union Budget, we reckon the upside risks to Inflation may have been downplayed by MPC. “

The author of this article is Niraj Kumar, Chief Investment Officer, Future Generali India Life Insurance

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com