Future Policy decision will be data driven
FinTech BizNews Service
Mumbai, August 6, 2025: The Monetary Policy Committee (MPC) held its 56th meeting from August 4 to 6, 2025 under the chairmanship of Shri Sanjay Malhotra, Governor, Reserve Bank of India.
Let us know views of the representative voices from the AMC-MF segment on the MPC decisions:
Nilesh Shah, MD – Kotak Mahindra AMC
“The Credit Policy has come as per market expectations. Growth estimates and policy rates remain unchanged. Inflation estimates revised downwards. Liquidity situation remains comfortable and will remain growth supportive. Future Policy decision will be data driven.”
Vikas Garg, Head – Fixed Income, Invesco Mutual Fund
“A Hawkish Pause! The MPC has held the policy rate at 5.5% after cutting it by a cumulative 100 bps over the previous three meetings, while maintaining a neutral stance. The FY26 headline inflation projection has been moderated by 60 bps to 3.1% on the back of benign food prices; however, 1QFY27 inflation is projected at 4.9% due to an unfavourable base effect. Growth projections remain healthy at 6.5% for FY26, despite global tariff-related uncertainties. Forward-looking growth-inflation dynamics set a high bar for any future rate cuts. A small window for a possible final rate cut may open in the October or December policy meetings, but only if economic growth surprises meaningfully on the downside. Comforting commentary on adequate banking liquidity provides some relief. Currently elevated market yields, combined with low running inflation, offer a favourable risk-reward profile for investors”
Abhishek Bisen, Head-Fixed Income, Kotak Mahindra AMC
“Despite the downward revision in average inflation projections to 3.10% (from 3.70%) for FY26, the RBI opted to maintain a “wait and watch” approach, keeping policy rates unchanged and stance at neutral with unanimous vote by all members— in line with expectations of majority of market players. The commentary was neutral to hawkish with GDP growth maintained at 6.50% for FY26 and inflation projection of 4.40% for Q4FY26 and 4.90% for Q1FY27. With this commentary and inflation forecast, the bar of any future rate cut is high, unless growth slows down meaningfully due to factors such as tariff related uncertainty. G-sec yields have hardened by 4-5 basis points, and in the near term, the 10-year benchmark is expected to trade within the 6.30%- 6.45% range.”
Avnish Jain, Head - Fixed Income, Canara Robeco Asset Management Company:
“The RBI Monetary Policy Committee (RBI-MPC) was along expectations as RBI MPC remained in a pause mode, with repo rate held steady at 5.5%, and keeping the stance at neutral. Though there were expectations from some quarters that RBI-MPC could deliver 25bps rate cut post the low inflation of 2.1% in June 2025. However, RBI MPC had noted in the June policy meet that 50bps rate was frontloading of rate cuts to ensure transmission of the easing cycle. In his speech, the RBI Governor noted that transmission was on-going. Despite reducing the inflation projection to 3.1% for FY2026 (from 3.7% in the last policy meet), RBI MPC noted that inflation is likely to rise above 4% on base effect and demand, and projected Consumer Price Index for 1Q FY2027 at 4.9%, obviating for further rate cut from 1year forward looking data. Growth projections were maintained, with real Gross Domestic Product of 6.5% in FY2026. On liquidity, RBI is likely to continue with daily Liquidity Adjustment Facility operations (both Variable Rate Repo) and Variable Rate Reverse Repo) to maintain sufficient liquidity in the system. On external sector, RBI Governor noted that Current Account Deficit is seen within sustainable level in FY26, despite challenging global environment.”
Kaustubh Gupta, Co-Head Fixed Income, Aditya Birla Sun Life AMC
The RBI’s status quo policy is on expected lines. Uncertainty emanating from US tariffs and its impact on growth (both domestic and global) and trade/financial flows warrants close vigil on assessing the potential impact on overall macro-economic conditions. We believe that with inflation remaining below target space for further rate easing will depend on evolving growth conditions.
