Thu, March 27, 2025
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Three reasons why Indian bond yield hits 3-year lows and why it points at more rate cuts

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The yield on government securities, especially the 10-year benchmark bond, has been witnessing a reduction since the start of this month. Data indicates that it has eased 15 bps so far in March.

The article from Moneycontrol discusses the reasons behind Indian government bond yields reaching a three-year low. Firstly, the decline in yields is attributed to a significant drop in inflation rates, with the Consumer Price Index (CPI) falling to 2.92% in April, the lowest in over a year, which has led investors to expect further rate cuts by the Reserve Bank of India (RBI). Secondly, the global economic environment, particularly the dovish stance of major central banks like the Federal Reserve, has influenced expectations of lower interest rates worldwide, impacting Indian bond yields. Lastly, the article mentions the RBI's liquidity management measures, including Operation Twist, which involves buying long-term securities while selling short-term ones, thereby pushing down long-term yields. These factors combined suggest that the market anticipates more rate cuts, potentially leading to even lower bond yields in the future.

Read the Full Moneycontrol Article at:
[ https://www.moneycontrol.com/news/business/three-reasons-why-indian-bond-yield-hits-3-year-lows-and-why-it-points-at-more-rate-cuts-12977583.html ]