The Monetary Policy Committee (MPC) conducted an off-cycle meeting between 2nd and 4th May 2022 to reassess the evolving inflation-growth dynamics post the April MPC meeting & took the following actions:
Retirement planning is one of the ignored facets of financial planning since the millennial population does not believe in saving for the future but instead lives in the present. In contrast, it becomes crucial to have a healthy financial corpus to take care of the life post-retirement in the absence of any formal social security scheme in India. The post-retirement life is often considered the second innings when one can fulfil their pending aspirations.
The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) voted unanimously to hike the repo rate by 50 bps to 4.90%. Consequently, the standing deposit facility (SDF) rate stands adjusted to 4.65% from 4.15% and the marginal standing facility (MSF) rate to 5.15% from 4.65%. The MPC maintained its “withdrawal of accommodation” stance while dropping the phrase “staying accommodative”, signaling a shift towards “neutrality”. The Governor reiterated that further monetary measures will be needed suggesting further rate actions to move towards a positive real rate in near term.
In the current market construct, there are some questions often on top of mind for fixed income investors:
Since the last RBI policy meet, global growth-inflation dynamics have changed drastically with increased risks of a synchronized global slowdown due to tight financial conditions & weak consumer sentiment. The US economy registered two consecutive quarters of negative growth. Global commodity prices have fallen meaningfully with Bloomberg commodity & agriculture spot index dropping by 11.3% & 18%, respectively in INR terms since June 8th, the last RBI policy (Source: Bloomberg).
We have often heard this phrase in relation to sports, especially when top-notch players seem to be going through a rough patch. Many of us may recall how the same was said about former cricketer Sachin Tendulkar when he was going through a similar phase. It was only after he scored his 100 th century that his critics accepted that ‘class is permanent’.
On 15th August 2021, India will celebrate its 75th Independence Day. Millions of freedom fighters lost their lives in this endeavour of unshackling India from British rule. As the country prepares to celebrate this milestone, it could also be an excellent opportunity for us to focus on independence on a more personal level, especially for matters related to our financial life.
