India G-sec yields edged lower in Dec, with markets hoping for a rate cut in the near term (as also reflected in receiving interest in the OIS). Moves lower in G-sec yields were limited with higher global benchmarks, sharp depreciation in INR. FPIs net bought in the debt segment last month. This was despite INR slipping to life-time low, though the INR weakening was less pronounced when compared to other EM currencies. The REER for Nov signaled that the INR was overvalued by 8% when compared with trading partners. The MPC held rates in Dec (4-2 voting in favor of outcome), and unanimously maintained the neutral stance. FY25 Projections for real GDP growth was lowered, while CPI inflation was increased. The central bank cut CRR by 50 bps. The FOMC cut rates by 25 bps, but revised the dot plot indicating only 50 bps easing this year as against 100 bps earlier.
