View on Monetary Policy (Dec, 2020) by Churchil Bhatt, EVP & Debt Fund Manager, Kotak Mahindra Life Insurance Company

“MPC has kept the policy rates unchanged and maintained the accommodative stance, thereby keeping the fine balance of supporting nascent growth recovery while being vigilant on any durable inflationary pressures. Additionally, RBI has assured markets of continued liquidity support while maintaining orderly market conditions. Revision in the On Tap TLTRO scheme and allowing RRBs to participate in LAF are steps that affirm RBI commitment in this direction. The dovish tone of the policy statement has assuaged market fears of an early withdrawal of the post pandemic liquidity support. Overall, with RBI’s assurance of lasting nature of growth supportive measures, we expect 10 Year benchmark yield to trade in 5.80 – 6.00% range for the rest of the financial year.”