Fixed Income - Redux? A Bond And Macro Update: IDFC AMC

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IDFC AMC Research

The reflation theme emphatically announced itself to the Indian shores with the set of inflation prints for May.

Thus Wholesale Price Index printed a multi-decade high of almost 13%, even as it was quite within the bound of expectations.

Consumer Price Index on the other hand overshot expectations by almost a full 100 basis points, printing a jaw-dropping 6.3% for May.

As discussed in detail in our post policy note, Reserve Bank of India now links bond yield and corporate bond spreads much more closely to its assessment of the general state of local financial conditions.

Its desired stance on the relative looseness in financial conditions is in turn linked to its assessment of the growth versus inflation tradeoff.

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