“The markets are still coming to terms with RBI’s bombshell last Friday. The SENSEX plunged 2.3%, the 10Y government bond yield collapsed over 13bp to 8.03%, and USD-INR shot above the 74.00 at one point before paring back gains to close around 73.77,” note Commerzbank analysts and add: “At today’s open, equities are modestly higher, while bond yields and INR remain under pressure.” Key quotes “Why was it a big surprise? This was because the 3-month overnight index swaps (OIS) market was fully pricing in 50bp worth of rate hikes in the next three months. A 25bp in October was seen as the bare minimum followed by another hike in the final meeting for this year on 5-December. Instead, RBI was unafraid to go against market expectations and accept the fallout. This was seemingly done to control the narrative on rate hikes.” “The six-member monetary policy committee voted 5-1 for no change with one voting for a 25bp hike. RBI also shifted the official policy stance to “calibrated tightening” from neutral. The vote split was 5-1 in favour of the hawkish bias with one member opting for no change. RBI Governor Patel reiterated this point in the press conference by noting that this essentially means “a rate cut is off the table for now”. This reinforced RBI’s positive growth outlook, unchanged at 7.4% for FY2018-19. RBI sees three key downside risks to growth, they are 1) ongoing trade tensions which will hurt both investor sentiment and investment decisions; 2) high oil prices; and 3) tighter financial conditions both domestically and globally e.g. last week’s spike in US 10Y government bond yield by 17bp to 3.23%.” “What was the justification? It was because of a more subdued inflation backdrop near term before picking up again in Q1 2019. RBI lowered the inflation outlook to 4.3% for FY2018-19 from 4.7% previously. It sees 4.3% in the first half of the current fiscal year, 4.2% in the second half of the fiscal year and picking up to 4.8% in Q2 2018.” FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next EUR/USD trims losses but remains under 1.1500 FX Street 3 years "The markets are still coming to terms with RBI's bombshell last Friday. The SENSEX plunged 2.3%, the 10Y government bond yield collapsed over 13bp to 8.03%, and USD-INR shot above the 74.00 at one point before paring back gains to close around 73.77," note Commerzbank analysts and add: "At today's open, equities are modestly higher, while bond yields and INR remain under pressure." Key quotes "Why was it a big surprise? This was because the 3-month overnight index swaps (OIS) market was fully pricing in 50bp worth of rate hikes in the next three months. A 25bp in October… Top Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.