View on RBI Monetary Policy - 6th June 2018 by Nishant Agarwal, Managing Partner & Head - Family Office, ASK Wealth Advisors
· As expected, conservative and cautious approach of RBI towards inflation and pickup of credit demand and investments was displayed in today’s Monetary Policy where Repo Rate was raised by 25 bps to 6.25%. Bond yields have already started to factor a hawkish policy stance over the last few weeks which was reflected in hardening of yields. Firm crude prices, higher MSP and revival of credit growth will keep RBI on neutral to hawkish stance for near future. While the GDP projections and Inflation trajectory for FY19 has not been changed in this policy, the rate rise also hints to government to keep fiscal policy in check so as to not crowd out private investment. With policy stance turning, in our opinion Debt MF investors should continue with FMPs/Short term funds for stable and consistent returns and avoid all duration based Mutual funds.