Most debt fund managers unsure if rate-hike cycle has begun

With the RBI surprisingly hiking interest rates for the first time in four years, there is some cloud over interest rate outlook. Should investors assume rates will be hiked from here on? Fund houses are telling investors to wait. It is important that investors understand that the RBI had increased the repo rate by 25 bps, while continuing to maintain its neutral stance. The decision to hike rate was taken in the backdrop of firming core-inflation and sharp rise in crude prices. If future data turns favourable, rate hikes may not happen as feared or could see just one or two hikes. According to HDFC Mutual Fund, the Monetary Policy Committee (MPC) maintaining its neutral stance, even with a hike in rates, can be viewed positively, as the next move will be data-dependent rather than a start of rate hiking cycle. Still, given the rising US yields, d