‘Return Of Investment Matters More Than Return On Investment’

What is your view on debt markets, interest rates, and the yield curve? When can we expect a rate reversal and how does it affect debt fund prices? Should investors change their debt segment allocation? In the August 2021 policy announcement, the Monetary Policy Committee (MPC) kept the rates unchanged in line with market expectations. However, one of the six members dissenting the accommodative stance reflects the change in thought process. Inflation projection was revised upwards and liquidity measures such as VRRR (variable rate reverse repo) auctions were announced. From October onwards, liquidity is expected to reduce as the festive season kicks in. With baby steps towards normalisation of liquidity amid higher inflation expectations, one can anticipate gradual stance reversal by the December 2021 policy meet and rate action before the end of 2022. Going forward, we expect the RBI...