Axis Bank expects a 25 basis points hike in lending rate in Reserve Bank of India’s February monetary policy and thereafter, the broad consensus is that there could be a pause. However, the bank does not expect any rate cut, as of now, in FY24.
Neeraj Gambhir, Group Executive and Head-Treasury, Markets and Wholesale Banking Products at Axis Bank, however, told CNBC-TV18 he does not anticipate much of a change in the yield curve.
Gambhir also noted that in the longer time frame, the key driver will be how deposit growth shapes up. He added that home loan rates are linked to the repo rate, the rate at which the RBI lends to commercial banks.
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Reflecting on the bond market, Suyash Choudhary, Head-Fixed Income at IDFC MF, stated market participants underestimated the depth of the bond market. He also noted that insurance has been a very positive surprise and that he does not expect a material change in this trend.
Choudhary warned that there may be volatility if the Federal Reserve moves differently than market expectations.
However, he does not expect any policy tightening post February. “We continue to believe that as core liquidity starts shrinking towards, let's say the one-one-and-a-half lakh area, from there, we will watch for RBI action more closely. Obviously, it must be consistent with the direction of monetary policy. And we don't expect after February policy tightening to continue,” he said.
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For the entire discussion, watch the accompanying video
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