RBI's Mega Liquidity Boost Set to Drive Indian Bond Yields Lower

Indian government bond yields are set to fall as the Reserve Bank of India (RBI) announces yet another huge liquidity injection plan. The central bank said it will inject more than $21 billion into the banking system via open market operations and FX swaps. The action is designed to soften lending conditions and spur economic growth. The benchmark 10-year yield is forecasted to move in a range of 6.65% to 6.70%, from its last close of 6.7087%. Analysts see this surge in liquidity increasing rate transmission and further cuts in interest rates in April and June, reaffirming the RBI's intention to support economic growth.

 

Sources: Reuters, Business Standard, Times of India