RBI May Hike Rates by FY27 as Rate-Cut Cycle Ends, Says PGIM India
· Business · Economic Times, Moneycontrol
India's rate-cut cycle has concluded, and the Reserve Bank of India could begin raising policy rates by 50 to 75 basis points by the end of FY27, according to PGIM India's Head of Fixed Income, Puneet Pal. Rising crude oil prices, elevated global bond yields, and sticky domestic inflation are expected to put renewed pressure on the Indian bond curve. Pal noted that benchmark CPI inflation projections and surging crude prices will likely force the Monetary Policy Committee to consider rate hikes starting as early as the October policy meeting. Despite the tightening outlook, rising yields are seen as an attractive entry point for fixed-income investors over the next six months. He recommends a phased investment approach, specifically targeting high-quality corporate bond funds and target-maturity funds while the 10-year government bond yield hovers around 7%.
Why it matters
A shift toward a rate-hiking cycle will impact borrowing costs for consumers and corporations while altering return expectations for fixed-income mutual fund investors in India.
Read the original report — Economic Times
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