Markets see 20-bps rate cut by February as OIS curve shifts lower

The one-year OIS rate has dropped to a month-low, with markets pricing in a 20-bps repo rate cut by February after RBI's governor signalled room for easing, though uncertainty over December's move per

The one-year overnight indexed swap (OIS) rate, the most closely watched gauge of near-term interest-rate expectations, is now pricing in a 20 basis-point cut in the repo rate by February, market participants said.

 

Overnight swap rates have declined across the curve this week.

 

The one-year OIS rate fell six basis points this week, trading at over a month’s low.

 

On Wednesday it settled at 5.42 per cent, unchanged against Tuesday’s rate.

 

The bond market gained renewed clarity on the prospects of a policy repo-rate cut after Reserve Bank of India (RBI) Governor Sanjay Malhotra said earlier this week there remained