Indian Bond Yields Drop as Markets Anticipate RBI's First Rate Cut in 5 Years

Indian government bond yields declined significantly, with the benchmark 10-year yield falling to 6.6665% from 6.7001%, as markets position for an expected interest rate cut by the Reserve Bank of India. The anticipated 25-basis-point reduction would mark the RBI's first rate cut since May 2020. This market optimism follows the RBI's recent liquidity-boosting measures, including bond purchases worth ₹208.50 billion and a $5.1 billion forex swap. The central bank's monetary policy decision, due February 7, is being closely watched by investors amid signs of moderating inflation and the government's demonstrated fiscal prudence.

Sources: Reuters, Business Standard, Trading Economics