MUMBAI, Feb 8 (Reuters) – Indian government bond yields were little changed on Wednesday as market participants awaited the Reserve Bank of India’s monetary policy decision, with the focus on a change. sign probably indicating the direction.
The benchmark 10-year yield was 7.3110% at 09:50 IST, after closing at 7.3102% on Tuesday.
The RBI’s Monetary Policy Committee (MPC) has raised the report by 225 basis points (bps) to 6.25% since May, maintaining its stance ‘focused on withdrawing accommodation while continuously raising rates’ .
It is likely to raise the key interest rate by 25 basis points to 6.50%, according to a Reuters poll of economists.
“Position would be a game changer today not rate action,” said a trader at a private bank.
“If they move to dovish, we could retest the critical 7.26% levels again.”
More than three-quarters of economists, 40 out of 52, expected a 25 basis point increase, according to the poll conducted between Jan. 13 and Jan. 27. The other 12 predicted no change at the meeting.
Traders said that if the central bank chooses to maintain its stance when the accommodation is withdrawn, yields could rise.
“By not changing the policy stance to neutral, the MPC could leave the door open for further rate hikes, if needed,” said Vivek Kumar, economist at QuantEco Research.
The local monetary policy decision comes after the Federal Reserve raised rates by 25 basis points last week and is expected to raise rates another 50 basis points through June.
The U.S. 10-year yield jumped 25 basis points, while the two-year yield climbed 38 basis points in the past three sessions through Tuesday as traders factor in a higher benchmark rate. 5%.
Traders are also awaiting a big supply as the central government prepares to raise 80 billion rupees ($967.70 million) through green bonds on Thursday and 300 billion rupees through debt sales on Friday. ($1 = 82.6700 Indian rupees)
