Business Standard

Premature tightening: No reason for bond yields to stay at elevated levels

But waiting for the market to self-correct could be costly for the economy

A premature tightening

Neelkanth Mishra
At just about the same time that India’s economic growth has started to pick up from the recent trough, monetary conditions have begun to tighten. For those dependent on the bond market, conditions have already tightened sharply, with interest rates up by nearly a per cent and a half. They are no longer a minority: in the last financial year, nearly five trillion of the seven trillion rupees of incremental credit was funded outside the banking system. Even bank funded entities may now expect higher rates, with the bellwether State Bank of India (SBI) now raising lending rates by twenty
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

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First Published: Mar 07 2018 | 5:57 AM IST

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