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Karur Vysya Bank head of treasury VRC Reddy on RBI Policy
This story was originally published at 11:37 IST on 5 August 2026
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MUMBAI - V.R.C. Reddy, head of treasury, Karur Vysya Bank, said the following on the Reserve Bank of India's third bi-monthly monetary policy statement for financial year 2026-27 (Apr-Mar) detailed Wednesday:
The RBI has delivered a policy of continuity with no surprises. While the repo rate and neutral stance were widely expected, the upward revision in growth and downward revision in inflation reflect confidence in India's resilient macro fundamentals, giving the policy a mildly dovish undertone. The governor's tone suggests that the RBI remains comfortably on hold, with any discussion on rate hikes likely deferred to next calendar year, unless global developments materially alter the outlook.
With domestic fundamentals remaining robust, the market's focus now shifts to global central bank actions, crude oil prices and developments in West Asia. Healthy Balance of Payments, sustained Foreign Portfolio Investor inflows and strong Foreign Currency Non-Resident (Bank) mobilisation should continue to support rupee stability and durable liquidity.
For the bond market, the policy offers few fresh directional cues. G-Sec (government security) yields are likely to be driven by liquidity conditions, crude prices and global bond yield movements. Strong FCNR led liquidity should keep the short end well supported, while the 10-year benchmark is expected to trade in the 6.70%–6.90% range this quarter, barring any major global shocks. End
Compiled by Janwee Prajapati
Filed by Akul Nishant Akhoury
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