RBI Monetary Policy

Monetary Policy – Remains dovish despite high inflation

The MPC members unanimously voted for keeping the policy rates unchanged

The MPC decided with a 5 to 1 majority to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remained within the target going forward

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Equity Market Review

Nifty gained 0.3% to close at 15,763 in the month of July after trading in a tight range of 15,500 -16,000 during the month. However, the broader market continued its strong uptrend with BSE Midcap and BSE Smallcap indices gaining 2.5% and 6.1%, respectively as the economy started to recover from the COVID-19 wave 2 disruptions.

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Debt Market Review

Benchmark 10-year yield closed at 6.20%, up by 15 bps from its previous close of 6.05%. The Monetary Policy Committee (MPC) came out with their bi-monthly policy statement today. The central bank left interest rates unchanged at record lows while reiterating an accommodative stance as long as necessary to support growth. The repo rate remains at 4%. The reverse repo rate was held steady at 3.35%.

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