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RBI Likely to Lift Repo Rate Near 6% as Inflation and Global Yields Stay Pressured, Says Zurich Kotak CIO
Reported by Ananya Das (Senior Writer) · Economic Times - Markets ·
Reported by one source so far
Representative image · Wikimedia CommonsETMarkets Smart Talk: RBI may hike 50-75 bps; Archit Shah on what's next for bonds. Archit Shah, CIO at Zurich Kotak General Insurance, expects the RBI to hike repo rates by 50-75 bps towards 5.75-6% if inflation, crude, and global yields remain under pressure. Advising patience on duration, Shah recommends carry and roll-down strategies while navigating rising correlation and liquidity risks in portfolios. RBI may hike rates 50-75 bps, says Archit Shah India's bond market is exhibiting notable strength, outpacing its historical performance and standing firm against global trends. The Deputy Governor of the Reserve Bank of India highlighted the promising fiscal commitments
ExplainerWhy this matters
What Happened
The RBI is likely to raise its repo rate by 50‑75 basis points, pushing the benchmark to about 5.75‑6 per cent, according to market strategist Archit Shah.
Why It Matters
Higher repo rates make borrowing more expensive for banks, which in turn raises loan rates for businesses and consumers. Bond yields move up, lowering the price of existing bonds and affecting pension funds and insurance portfolios. Investors also face tighter liquidity and stronger linkages between stocks, bonds and commodities, making risk management harder.
What Happens Next
The RBI will watch inflation, oil prices and global yield trends closely before deciding. If these pressures persist, a rate hike is probable in the next policy meeting. Market participants should track RBI statements, CPI data and crude‑oil movements, and adjust bond duration and strategy accordingly. If inflation eases or global yields fall, the RBI may hold rates steady, giving investors a chance to re‑evaluate their positions.
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