MF Houses Expect 50 Bps Cut In Policy Rates In 2015

Mumbai: As the RBI maintained a status-quo on interest rates today, mutual fund houses said they expect the central bank to cut policy rates by 50 basis points in the next few months in view of improving macro-fundamentals.

"In 2015-16, we expect CPI inflation to be close to 5.25 per cent with a downward bias which leaves enough scope for RBI to bring down rates close to 7 per cent in the next 2-3 quarters," ICICI Prudential AMC Chief Investment Officer (Fixed Income) Rahul Goswami said.

"We believe there is potential for interest rates to trend further downwards by 50 bps over the next few months," he added.

A section of the industry feels the upcoming Union Budget will determine RBI's future course of action on rates.

"The Budget and the quality of fiscal deficit will be crucial in influencing RBI's future rate decisions," Peerless Fund Management Managing Director and Chief Executive Officer Rajiv Shastri said.

"We still maintain our view that inflation would be soft and we can expect rate cuts of about 50 bps during the calendar year (2015)," IDBI Asset Management Company's Head- fixed income Ganti N Murthy said.

"The Budget and borrowing figures become increasingly important from the market viewpoint to determine the course and the pace of rate cuts in the time ahead. Duration funds seem better placed to tap this evolving environment," Kotak Mutual Fund Chief Investment Officer (debt) and Head-products Lakshmi Iyer said.

RBI Governor Raghuram Rajan today chose to keep interest rates unchanged for the seventh time, out of 11 monetary policy decisions taken under his reign so far.