Reserve Bank of India New Interest rates Bond yields fell seven basis points (0.07 per cent) to 6.73 per cent on Thursday after leaving no change in policy interest rates, according to a report by SBI Research.
By not making home loans and car loans expensive, RBI has given a big relief. Because the Reserve Bank of India (RBI) has kept the policy rate and liberal stance for the tenth time in a row, surprising everyone, as well as keeping a clear distinction between policy stance and policy strategy. Bond yields fell seven basis points (0.07 per cent) to 6.73 per cent on Thursday after leaving no change in policy interest rates, according to a report by SBI Research. Immediately after the announcement of RBI, it had declined by 0.1 percent but later the situation improved slightly.
In contrast, bond yields rose to 6.88 per cent after the announcement of capital expenditure of Rs 7.5 lakh crore on the day of the Budget. RBI has said after the monetary policy review that the GDP growth rate in the financial year 2022-23 is estimated at 7.8 percent and inflation at 4.5 percent. With this, it has projected the Wholesale Price Index to be around 2.8 percent in the next financial year.
Soumya Kanti Ghosh, chief economic advisor at SBI, expects 10-year bond yields to decline further and stabilize at 6.55-6.6 per cent. He said that even though the RBI’s policy statement took the market by surprise, the central bank may have been ahead of the market’s expectations. Due to this, the policy strategy and stance of RBI in the financial year 2022-23 may be different. He called it a truly unconventional monetary policy.
Ghosh said that while the RBI has clarified the difference between strategy and trend, it has also shown that both can co-exist. He said that both of them work as a complement to each other.
