You don't have to shell out more for your loans or tweak your equity or debt investment strategy for the time being, provided RBI doesn't surprise the market with rate hikes before its next policy review due in July.
According to experts, the RBI's tempered increase of key policy rates such as repo, reverse repo and cash reserve ratio on Tuesday suggests that the banking regulator is likely to continue its cautious tightening without hurting either the growth prospects or the liquidity in the economy .
However, don't celebrate yet as most money market participants expect the central bank to go for a series of hikes in key rates during the current financial year.
Banks are unlikely to start raising deposit or loan rates immediately as there is ample liquidity in the banking system.
Also, bankers believe that the scope to increase loan rates is limited as the demand for credit is yet to pick up significantly. Also, traditionally , demand for credit is muted at this time of the year. At the moment, banks are unlikely raise interest rates.
It is also status quo for investors of both equity and debt mutual funds.
‘‘ Investors can continue with their strategy of focusing on short-term debt funds if their horizon is less than a year. However, if they want to bet on long term for, say, two years, they can get into gilt or bond funds anytime before the next policy,'' says Lakshmi Iyer, head - fixed income & products, Kotak AMC.
According to MF experts, investors can hope to earn around 6-7 % from short-term funds and around 8-10 % from long-term schemes.
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