Quote from Dr. Poonam Tandon, CIO, IndiaFirst Life Insurance Company Limited on today’s RBI Policy announcement 

The monetary policy review kept the rates unchanged as expected and guided for continued accommodative stance as long as required. Inflation outlook is expected to remain at stable to moderate levels (around ~5% over the next 6 months). GDP growth outlook has also improved to 10.5% in FY22 while inflation within tolerance levels provides more room to RBI to keep monetary policy firmly accommodative. The RBI further provided guidance on liquidity management framework and  continue to remain in line with the policy stance. The rollback of CRR has been made in a two phased manner and  therefore RBI stated that it will use other market instruments to inject liquidity. Providing on-tap TLTRO to NBFCs is positive for on-lending to stressed sectors. Other regulatory measure such as easing of CRR norms for MSME loans, relaxation of HTM limits  till mid-2023 and some other norms for microfinance sector are additional liquidity management measures.  The opening up of government security market to retail investors is a structural change and will build up slowly.

The bond yields have increased in view of the higher than expected market borrowings. We expect the yields to be range bound. The overall tone is dovish, and RBI remains committed to supporting growth while ensuring adequate system liquidity.