If you are a fixed income investor who needs regular income, then falling interest rates are a serious dampener. Sujoy Kumar Das, head-fixed income, Invesco Mutual Fund suggests ways to manage your fixed income portfolio in a conversation with Moneycontrol’s Nikhil Walavalkar. Excerpts:
Reserve Bank of India (RBI) has aggressively cut interest rates and infused liquidity. Given the high inflation numbers in the recent past, will RBI cut rates?
The current pause in the policy rate cut cycle is temporary on the backdrop of high inflation numbers. The banking regulator will keep track of the situation for some time and see if the government addresses supply side issues that have caused higher inflation. After the supply side issues are addressed, inflation should come down. RBI will then assess the growth situation and further cut policy rates aggressively, if required.
We have seen negative real rate of interest in India. If the situation persists, will it be wise to invest in fixed income avenues?