Bagla: Inflation Unlikely To Come Down

The transcript discusses the Reserve Bank of India's (RBI) unexpected decision not to hike interest rates, which led to a short covering rally. It explores inflation expectations, government bond supply, and the potential impact of the Federal Reserve's tightening policy. The discussion also covers the RBI's liquidity stance, the influence of foreign funds on Indian bonds, and the need for higher bond yields. The challenges of RBI's bond buying strategy amidst tight liquidity are highlighted.

What was the unexpected move by the RBI that influenced the market rally?

• Hiking interest rates

• Reducing inflation expectations

• Not hiking interest rates

• Increasing government bond supply

What is the expected trading range for Indian bonds given the inflation expectations?

• 8% to 8.5%

• 7% to 7.5%

• 6% to 6.5%

• 5% to 5.5%

What factor is more influential at the longer end of the yield curve?

• RBI's liquidity stance

• Inflationary expectations

• Foreign fund inflows

• Short-term interest rates

Why might foreign funds not immediately view Indian bonds as a safe haven?

• High government bond supply

• Stable inflation expectations

• Low real interest rates

• High real interest rates

What condition might make Indian bonds more attractive to investors?

• Increased foreign fund inflows

• Stable crude oil prices

• RBI's repo rate being higher than expected inflation

• RBI's repo rate being lower than expected inflation

How much bond buying does the RBI need to undertake in the fiscal year?

• Four Lac crores

• Three Lac crores

• Two Lac crores

• One Lac crore

What challenge does the RBI face in maintaining liquidity while buying bonds?

• Increasing interest rates

• Reducing inflation expectations

• Keeping liquidity tight

• Increasing foreign fund inflows