We expect more measures from RBI on liquidity front

The early February rate cut by the Reserve Bank of India (RBI) is likely to be followed by another reduction of 25 basis points (bps) by June 2025, believes DEEPAK AGRAWAL, chief investment officer, debt, at Kotak Mutual Fund. Agrawal, in an email interview with Abhishek Kumar, said actively managed duration funds could be considered by investors who can tolerate volatility, and medium-duration funds with a three-year tenor for those seeking less volatile portfolios. Edited excerpts:

- 

What are your key takeaways from the latest RBI monetary policy? Do you expect more rate cuts in 2025?

The RBI decided to cut policy rates by 25 basis points (bps) after a pause of almost two years, while maintaining a neutral stance. The central bank aims to use liquidity measures to drive rates but refrained from taking any direct liquidity actions in the policy. However, they communicated their intention to provide sufficient liquidity on both an overnight and durable basis, which was followed by an increase in open market operation (OMO) purchases. We expect more liquidity measures from the RBI in the near to medium term. On the rate front, we anticipate one more 25 bps cut by June 25. The RBI's Monetary Policy Committee actions in the medium term will be determined by domestic data and global actions, particularly from the US.