CRISIL Market Intelligence & Analytics (MI&A) expects two policy rate cuts by the six-member Monetary Policy Committee (MPC) this fiscal year starting October 2024.
The MI&A team, comprising economists and fixed income analysts, said the MPC aims to see a sustainable reduction in inflation to 4 per cent amid strong economic growth momentum as monetary policy eases.
âThis will monitor the monsoon over the next two months, which is important to reduce food and overall inflation. “Other extreme weather events and geopolitical shocks will also be monitored,” the team said in its report “Rate View.”
The MPC at its June meeting kept the policy repo rate unchanged at 6.50 per cent, while maintaining its stance of withdrawing the adjustment.
Giving its one-month outlook and three-month outlook on interest rates, the MI&A team expects the 10-year Government Security (G-Sec: 7.10 per cent GS 2034) yield to range from 6.95-7.05 per cent in July and September. Will remain within range. 2024.
The yield on the 10-year benchmark government security opened at 6.95 per cent in June and closed at 7.01 per cent, higher by 2 basis points (bps) from 6.99 per cent in May.
one month view
In July, domestic G-Sec yields are likely to be influenced by factors such as the upcoming Union Budget, FPI inflows, crude oil price fluctuations, rupee-dollar equation, outcome of the US Federal Open Market Committee (FOMC) meeting. Will be held at the end of July, and there will be domestic flows into the debt market.
three month view
The 10-year G-Sec yield is expected to react to FPI flows, crude oil prices, global interest rates, CPI inflation print, RBI MPC and FOMC rate decisions, global cues and liquidity concerns.
