 "Bond yield spike should ease on RBI action: Chidambaram")
Finance Minister P Chidambaram on Tuesday said the sharp rise in yield on government bonds, driven by high inflation, was temporary and would come down on the Reserve Bank of India (RBI) taking some steps.
"We hope that with some measures the RBI will take, and when the next set of inflation figures come, if food inflation moderates, it's possible that G-sec rates will go down," he said at a press conference after the launch of the Bharatiya Mahila Bank.
Bond yields have risen since RBI raised interest rates for a consecutive month, on October 29. The yield on the 10-year benchmark at Tuesday’s close was nine per cent. It had spiked to 10 per cent on Thursday last week, closing at 9.02 per cent, on higher readings in wholesale and retail inflation.
Chidambaram said the next round of inflation numbers, especially food inflation, would have a bearing on the yield. He had discussion during the day with RBI governor Raghuram Rajan on the issue (G-sec yields), the minister said on Tuesday.
Wholesale price inflation inflation for October was placed at seven per cent over a year, higher than the 6.46 per cent in September. The inflation for August was revised higher to 6.99 per cent, from the earlier estimate of 6.10 per cent. Retail inflation (consumer price index) was 10.1 per cent.
Rajan, on November 13, had said food inflation was still worryingly high and the effects of the harvest were still awaited. Adding: “But looking through the headline numbers, I am somewhat more heartened by the outcome of core CPI inflation, which declined to 8.1 per cent from 8.5 per cent in September. The momentum for core inflation is also on the decline,” he’d said.
"We hope that with some measures the RBI will take, and when the next set of inflation figures come, if food inflation moderates, it's possible that G-sec rates will go down," he said at a press conference after the launch of the Bharatiya Mahila Bank.
Bond yields have risen since RBI raised interest rates for a consecutive month, on October 29. The yield on the 10-year benchmark at Tuesday’s close was nine per cent. It had spiked to 10 per cent on Thursday last week, closing at 9.02 per cent, on higher readings in wholesale and retail inflation.
Chidambaram said the next round of inflation numbers, especially food inflation, would have a bearing on the yield. He had discussion during the day with RBI governor Raghuram Rajan on the issue (G-sec yields), the minister said on Tuesday.
Wholesale price inflation inflation for October was placed at seven per cent over a year, higher than the 6.46 per cent in September. The inflation for August was revised higher to 6.99 per cent, from the earlier estimate of 6.10 per cent. Retail inflation (consumer price index) was 10.1 per cent.
Rajan, on November 13, had said food inflation was still worryingly high and the effects of the harvest were still awaited. Adding: “But looking through the headline numbers, I am somewhat more heartened by the outcome of core CPI inflation, which declined to 8.1 per cent from 8.5 per cent in September. The momentum for core inflation is also on the decline,” he’d said.