MPC mins show inflation concern. Will India let foreigners buy more bonds?

As the bond rout deepens, the one group who actually wants to buy the debt looks set to remain shut out of most of the market

India’s bond rout is deepening as Prime Minister Narendra Modi’s expansionary budget prompts a hawkish turn from the central bank.

Expectations for rate hikes are building after minutes of the Reserve Bank of India’s February 6-7 meeting released Wednesday showed there was concern that inflation already running at faster than 5 per cent will accelerate. Onshore markets are pricing in an increase of about 45 basis points in the benchmark repurchase rate over the next 12 months, said Vivek Rajpal, a rates strategist at Nomura Holdings Inc. in Singapore.

India’s public finances are worsening after deficit targets were widened in the budget