Bond yields ease as MPC minutes hint at slower interest rate hikes

1-year bond yield logs the sharpest fall in two-and-a-half months

Yields on government bonds fell sharply on Monday as the minutes of the Monetary Policy Committee’s September 28-30 meeting were perceived as suggesting a slower pace of rate hikes by the Reserve Bank of India (RBI) going ahead. Bond prices rise when yields fall and vice-versa.
 

The 10-year benchmark bond yield closed 7 basis points lower at 7.40 per cent on Tuesday. The yield on the one-year government bond hurtled 14 basis points to close at 6.78 per cent. Short-term bond yields are highly sensitive to near-term interest rate expectations.
 

On Monday, the one-year bond yield registered its sharpest single-day