Analysis Of G-Sec Yields This Year: CareEdge
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CareEdge Research Report
The financial year so far has been characterised by the maintenance of an accommodative monetary stance by the Reserve Bank of India which is manifested by an unchanged repo rate and a surplus liquidity state. This has been done to ensure that funds are available at a reasonable cost to all borrowers.
The market however has behaved in a different manner and the bond yields have tended to move in the upward direction. Two factors have driven this sentiment. The first is inflation, which has become generalised and while the consumer price index inflation numbers has been around 5% for most part of the year, the wholesale price index had been in double digits reflecting the boom in global commodity prices.
Within CPI besides edible oils in the food basket, there has been an increase in core inflation thus leading to the expectation that it is a matter of time before interest rates are increased.
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