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10-year bond yield hits 7% as Rbi announces monetary policy

The yield on 10-year bonds had already risen slightly to almost 7% before the policy meeting. The benchmark 10-year government bond yield rose 1.37% on April 8 on the RBI announcement, then fell slightly. It was still up 1.24% at 11:15 a.m.

The 10-year bond yield had closed at 6.91% on April 7, 6.92% on April 6 and close to 6.90% on April 5.

The Russian-Ukrainian war and rising fuel prices prompted the six-member Monetary Policy Committee (MPC) to raise inflation forecasts for the current fiscal year and lower its estimates for real product growth. gross domestic (GDP) for fiscal year 23 to 7.2%. by 7.8 percent.

“The RBI forecasts CPI (consumer price index) inflation at 5.7% for FY23, down from 4.5% previously forecast,” RBI Governor Shaktikanta Das said.

The RBI now expects GDP growth of 16.2% in Q1 versus 17.2% previously, and 6.2% in Q2 versus 7% previously. For Q3, the central bank now forecasts GDP growth of 4.1% vs. 4.3% previously, and 4% for Q4 vs. 4.5% previously.

Shaktikanta Das said the RBI assumed the crude rate at $100 a barrel to estimate CPI and growth. He thinks crude oil prices will stay high for some time.

Bond yields were anchored amid global volatility, as they had benefited from a reprieve from government debt supply for February and March. The government’s FY22 borrowing program ended on February 25, and for that month the supply of bonds in the market was lower than expected due to canceled auctions.

The MPC voted unanimously to keep the repo rate unchanged at 4% and to remain accommodative while focusing on withdrawing accommodative to ensure inflation remains within target going forward while supporting growth.

RBI LIVE Monetary Policy Blog

First post: STI

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