The MPC outcome is on expected lines only. RBI will continue to focus on aligning inflation towards its target of 4% which is expected to be attained by June-August. Inflation expectations for Q4 and Q1 have also been reduced. So, the market may discount a rate cut possibility during the end of the 2nd quarter or 3rd quarter. Both the debt market and equity market may discount a rate cut possibility during the end of the 2nd or 3rd quarter.
The tight liquidity in the banking system may continue for some more time as the focus is on bringing inflation towards 4%. Increased public debt globally has been cited as a concern and which is very important.
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