Interest rate cycle is turning, experts foresee gradual rise in loan costs

10-year bond yield may touch 6.5% soon, guided by orderly evolution motif of RBI

The 10-year bond yield may rise to 6.50 per cent soon and touch even 7 per cent in a year, indicating a turn in the rate cycle, which will push up borrowing costs for the government, firms, and retail loan takers. However, the rise will be slow, experts say, and players in the system will have ample time to readjust to it.  

The Reserve Bank of India (RBI) had tried to keep the yield under 6 per cent for the better part of the calendar 2020, but has let it rise gradually since February this year, preferring an “orderly evolution