Views of Mr. Avnish Jain, Head – Fixed Income, Canara Robeco

“The status quo in rates in the RBI policy has come as an unpleasant surprise since most market participants were expecting at least a 25 bps rate cut, some even a 50 bps rate cut. RBI has held rates steady despite the fears that the economy is staring at a slowdown as a repercussion of the implementation of the demonetisation exercise. The RBI has revised the full year GVA growth for 2016-17 down from 7.6% to 7.1%. It chose to adopt a wait-n-watch approach and see the impact on macro-economic conditions beyond Dec’16.”

 Views of Ms. Bekxy Kuriakose, Head – Fixed Income, Principal Pnb Asset Management

“Belying market expectations, RBI decided to keep key rates unchanged. Bond markets have expectedly reacted negatively given that 25 bps was already factored in with some segments even expecting 50 bps rate cut. RBI has clearly specified they need  data and more time to evaluate the effects of demonetization and clearly do not wish to react disproportionately to “short term transient” effects. Global developments including sharp rise in US treasury yields and expected hike in US Fed funds rate also seems to have weighed on the policy move. And on inflation they seem to have noted the resistance of core inflation (ex food and fuel) to downward impulses.”