Mumbai : Indian government bond yields ended higher on Wednesday after the Reserve Bank of India (RBI) maintained the accommodative stance and said that leaving the market open for further tightening, core inflation remained high.
The benchmark 10-year yield ended at 7.3435% after closing at 7.3102% on Tuesday.
The 10-year 7.26% 2033 bond yield ended at 7.3041%. Bond market trading was extended by 30 minutes at 4:00 PM IST.
Karur Vysya Bank’s treasury chief VRC Reddy said the RBI’s monetary policy is on expected lines, but its design is a bit aggressive as it has kept the option open to act according to upcoming data and global conditions.
“In the absence of a positive trigger in the near term, demand and supply metrics will play a key role in driving up yields and I expect the benchmark 10-year bond yield to reach 7.40% in the coming days,” Reddy said.
The central bank raised the repo rate for the sixth consecutive time by 25 basis points to 6.50%, which was expected, but said the policy stance would remain focused on a return to accommodation, with four of the six Monetary Policy Committee members voting in favor. ,
Most analysts had expected the hike to be the last in the RBI’s current tightening cycle, while some were expecting the stance to turn neutral.
A growing number of central banks around the world have signaled a pause or pause in their tightening operations in recent weeks as consumer inflation simmers and growth shows signs of slowing.
Traders will now brace for huge debt supply over the next two days, as the central government is set to raise 80 billion rupees ($969.78 million) through green bonds on Thursday and 300 billion rupees through debt sales on Friday. ($1 = Indian Rupee 82.4930) (Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)
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