Bond investors dumbfounded after RBI's surprising tilt towards rate hike

The minutes add to a feeling of whiplash in the bond market that only last month rebounded from its longest rout in two decades amid a slew of supportive measures by policy makers

A surprising hawkish tilt by India’s central bank in its April minutes has left money managers dumbfounded, prompting them to seek a higher risk premium for holding the nation’s bonds.

The benchmark 10-year yield jumped as much as 17 basis points Friday, and ended last week 29 basis points higher, as minutes of the Reserve Bank of India’s April 4-5 meeting boosted speculation policy makers are moving toward raising interest rates. At the gathering, the RBI had maintained a neutral stance and lowered its inflation forecasts.

“The RBI risks losing market credibility,” said Arvind Chari, head of fixed income and