RBIâs Liquidity Stance: Did Bond Markets Get It Wrong?
Feb 06 2021, 12:13 PM
February 05 2021, 10:22 PM
February 06 2021, 12:13 PM
Bond yields rose. And then they fell. All in the space of a couple of hours. In the middle, a scheduled bond auction fell through as traders tried to force the central bank to sell securities at a higher yield. The central bank rejected the bids, sending a signal that while itâs moving toward ânormalisingâ liquidity operation, it will keep a tight rein on bond yields to ensure financial conditions donât tighten.On Feb. 5, the RBI sai.
Bond yields rose. And then they fell. All in the space of a couple of hours. In the middle, a scheduled bond auction fell through as traders tried to force the central bank to sell securities at a higher yield. The central bank rejected the bids, sending a signal that while itâs moving toward ânormalisingâ liquidity operation, it will keep a tight rein on bond yields to ensure fin
Synopsis
Yields on benchmark bonds have risen 22 basis points since the budget announcement that the government would borrow more this year and of an elevated borrowing calendar next year. When bond yields rise, prices fall.
Reuters
The gauge recouped part of its losses on select profit booking by public sector banks.
Mumbai: Bond speculators are testing the Reserve Bank of India’s unwritten objective of not interfering in the bond market ahead of a monetary policy review.
Yields on benchmark bonds have risen 22 basis points since the budget announcement that the government would borrow more this year and of an elevated borrowing calendar next year. When bond yields rise, prices fall.
RBI seen keeping rates at record lows, liquidity stance key
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Last Updated: Feb 03, 2021, 01:45 PM IST
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Synopsis
Having slashed its key lending rate or the repo rate by 115 basis points since March 2020 to cushion the shock from the coronavirus crisis, RBI is seen holding it at 4.0% through the rest of 2021 and possibly beyond, according to the median estimate in a Reuters poll.
Reuters
Though the repo rate is already at its lowest ever, some economists and market participants continue to expect one more rate cut in the April-June quarter. But, support for that view has faded since the last poll two months ago.