Yield curve steepens, short-term rates drop on RBI rate cut decision

A rate cut by the Reserve Bank of India (RBI) has brought down short-term rates, but longer tenure rates are refusing to come down as supply in that segment has satiated market appetite.
 
This behaviour of the rates meant that the yield curve has steepened with shorter term rates falling faster than longer term rates. Longer term rates, in fact, have inched up a little after the rate cut.
 
The RBI announced its rates decision on February 7, where it cut policy rate by 25 basis points and indicated more rate cuts for the coming days.
 
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