Bond yield shoots up; another interest rate hike likely in June

Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India, said he expected repo hikes in June and August policy review meetings too

Bond yields shot up on Wednesday after the Reserve Bank of India (RBI) increased the repo rate by 40 bps to 4.4 per cent by calling an out-of-turn meeting of the monetary policy committee (MPC). The yield on the 10-year government bond jumped 26 bps to close the day at 7.38 per cent while yields on the 3-year and 5-year bonds went up by 39 bps and 31 bps, respectively.

Yields could go up further as the central bank is seen to hike interest rates again in the scheduled policy review meeting in June. “With inflation likely to remain above