MUMBAI: Indian government bond yields are expected to dip in early deals on Thursday as the minutes of the central bank’s latest meeting hinted at more rate easing in coming months.
The benchmark 10-year bond yield is likely to move between 6.30% and 6.34%, a trader at a private bank said, compared with its previous close of 6.3294%.
“The minutes have pointed towards continuity of easing cycle and that should give some push to bulls today,” the trader said.
Inflation in India is expected to stay near target this fiscal year, providing space to support growth through further monetary easing, members of the country’s rate-setting panel said in the April policy minutes released on Wednesday.
India’s Monetary Policy Committee (MPC), which consists of three members of the Reserve Bank of India and three external members, lowered the repo rate by 25 basis points to 6% and changed its stance to “accommodative” from “neutral”.
As per the RBI estimate, the neutral real rate is between 1.4% and 1.9%, and this would imply space to cut policy rates by 50 bps in the remainder of 2025, IDFC First Bank said.
Indian bond yields dip ahead of RBI’s policy minutes release
Meanwhile, the underlying sentiment remains upbeat amid continuous open market bond purchases from the RBI, which has already bought notes worth 1 trillion rupees ($11.69 billion) in April and is scheduled to buy bonds worth 200 billion rupees next week.
Bond traders would also be observing developments on the geopolitical front after India announced a raft of measures to downgrade its ties with Pakistan, after suspected militants killed 26 men at a tourist destination in Kashmir.
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