From The Economic Times · ET CONTRIBUTORS · · 1m 10s
Rate Cut Cycle Near Turning Point
RBI's rate hike expected as Indian bond yields surge amid inflation fears.
In brief
RBI's rate hike expected as Indian bond yields surge amid inflation fears. RBI likely to start monetary tightening in October after stronger-than-expected growth and inflation risks. Originally reported by The Economic Times.
RBI tightens monetary policy
The RBI is widely expected to kick-start a tightening cycle in the October MPC meeting.
Elevated bond yields signal inflation risks
Benchmark 10-year bond yield closed at 7.1194% on September 25, a four-month high.
US Treasury yields rise
The US 10-year Treasury yield climbed to an intraday high of 5.20% on September 24.
Crude oil prices surge
Brent crude price crossed the $100-a-barrel level due to escalating West Asia conflicts.
Retail inflation rises
Retail inflation in August hit 4.82%, prompting market rate hike expectations.
RBI mops up liquidity
The RBI has mopped up excess liquidity through Open Market Operations (OMO).
Monetary tightening impacts
Higher bond yields will increase refinancing costs for government and corporate debt.
Rupee may strengthen
Monetary tightening could support the rupee by attracting foreign capital into government securities.
What matters most
RBI likely to start monetary tightening in October after stronger-than-expected growth and inflation risks.
