Has the interest rate peaked of late? The last rate hike came in February 2023, and ever since the Reserve Bank of India (RBI) has been on a pause. Given that inflation has stayed within RBI’s upper tolerance band of 6 per cent for the last six months, when do you anticipate the next rate cut?
The policy rates have peaked and are headed directionally down. The timing and quantum of the down move will depend on multiple internal and global factors. From a policy rate perspective, the concensus is 50-75 basis points (bps) of rate cuts over the next 12-15 months. This, combined with incrementally easier liquidity conditions, would effectively translate into 75-100 bps of policy rate cuts over the same time.
How do you interpret macroeconomic trends, such as the government’s focus on fiscal consolidation, and their impact on the bond market?
The macroeconomic conditions, specifically the continuous quantitative and qualitative improvements in twin deficits (fiscal deficit and current account deficit) augur well for medium-term core inflation prospects and, hence, medium-term policy rates and interest rates as well. A reducing fiscal deficit combined with a falling current account deficit trajectory, as has been the case since financial year 2021-22, has led to incremental easing of core inflationary pressures in the economy. Lower core inflation automatically feeds into lower headline inflation and, in turn, aids lower interest rates. This is already visible along with the impending bond inclusion story to a fair degree on the longer end of the yield curve (10 years and beyond). The shorter end of the yield curve (1-5 years) could incrementally react much more positively to actual rate cuts and easing liquidity conditions over the next year or so.
Yields are on a downward spiral. Do you think the market has started factoring in future rate cuts?
Diese Geschichte stammt aus der April 2024-Ausgabe von Outlook Money.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent ? Anmelden
Diese Geschichte stammt aus der April 2024-Ausgabe von Outlook Money.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent? Anmelden
Stay Ahead Of AI-Powered Cyber Fraud
AI has become an integral part of our lives, right from customer service at banks to insurance claims. But it has now become a powerful arsenal for the fraudsters too who are increasingly using AI to scam individuals and corporations alike to commit fraud. The key is to stay vigilant
Travelling To Europe? Pack In The Essential Covers
Smart travellers must know that insurance is a must-have. From essential health coverage to theft protection and trip interruptions, know what you need for a worry-free Europe trip
How To Spend Wisely This Year-End
We all spend during the year-end. But the trick is not to overspend or borrow, either from friends, or your own investment, to fund your indulgence. Maintaining balance is the key
Travel Now Pay Later (TNPL)
Travel now, pay later (TNPL) is a close cousin of the more popular buy now, pay later (BNPL) schemes.
12 Books Devina Mehra Loved Reading In 2024
Listing books of her choice, among the ones she reads during the year, is ace investor Devina Mehra's favourite year-end activity. She says it's a daunting task to pick around 12 books from a list of 50.
Here's How To Avail Of Ayushman Bharat Yojana
Launched in 2018, the Ayushman Bharat Yojana aimed to provide health coverage to targeted benefi ciaries from the Socio-Economic Caste Census (SECC) 2011, based on deprivation and occupational criteria.
'Focus On The Business, Assess If You Want To Be A Partner For 10-20 Years'
Professor Sanjay Bakshi, a value investor, behavioural economist and adjunct professor at Flame University, Pune, gives his unique perspective on how to choose a stock, in an interview with Nidhi Sinha, editor, Outlook Money, as part of the Wealth Wizards series. He also shares his learnings from role models Warren Buffett, Charlie Munger, Benjamin Graham and others, and how being a chartered accountant, economist, investor and teacher make him into what he is today. Edited excerpts from the interview
The New Trump Card For IT, Pharma
Donald Trump has been re-elected as the 47th President of the US after a gap of four years. Here's how it will affect the Indian markets and how it will benefit sectors such as IT, pharma, export-oriented sectors and others
European Sojourn
Tight on budget? Dump the popular European destinations for the little-known wonders that are equally attractive
Gold ETFs And FoFs
While Indians love to invest in physical gold, even mutual funds offer the option, but in paper format.