Policy holders to benefit from the 1st Bimonthly credit policy

 
Author – Sampath Reddy, Chief Investment Officer at Bajaj Allianz Life Insurance

 

The Reserve Bank of India came out with the 1st Bimonthly Monetary Policy statement for the fiscal year FY15-16. On the basis of its assessment of the current and evolving macro-economic situation, the RBI kept the policy rate unchanged with repo at 7.50%. This policy decision comes on the back of the surprise inter-meeting repo rate cut by the RBI on March 3, 2015. In terms of forward guidance, the RBI mentioned that the accommodative stance will be maintained, but actions will be conditioned by incoming data.

The RBI expects CPI inflation to fall to 4% by August but this would increase towards the end of the year. On the growth front, the outlook for growth is improving rapidly and GDP growth has been projected at 7.8% for FY16.
We expect interest rates to remain on a downwards trajectory over the coming months and expect an additional 25-50 bps cut in policy rates. With inflation expected to stay benign and growth still to pick up, RBI actions would continue to be accommodative as we head into an improving macro-economic scenario for the Indian economy.

Policyholders would be well placed to benefit with the economic revival and would be well placed if they continue to pay their premiums regularly and remain invested in the India growth story.

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