RBI likely to let market determine bond yields, says analysts
The RBI left the policy rates unchanged as expected but reiterated its accommodative stance both on the interest rate as well as more importantly on the liquidity side for as long as it takes. PTI
Reuters
Given the massive fiscal expansion scheduled for the next financial year Rs 12 lakh crore of government debt papers are set to flood the market analysts are of the view that the RBI is likely to let the market determine the yields and may not fixate on keeping the 10-year yield below 6 percent as it did in 2020.
In a report released on Tuesday, SBI Research pegged the FY21 deficit at 7.4% of GDP on the back of a revenue shortfall accompanied by a higher-than-budgeted outgo, while it put the FY22 deficit at 5.2% of GDP.