Inflation worries play on RBI's mind, dampen mood of bond market

Higher inflation projection rules out any rate cut possibility in the first half of FY22; bond yield jumps

Reserve Bank of India governor walked a tightrope on Friday as the six-member monetary policy committee (MPC) kept the interest rate unchanged for the fourth consecutive policy review while maintaining the accommodative stance despite projecting higher inflation in the first half of the next financial year. Though the status quo was in line with market expectation, a section of the market was also expecting a rate cut after the Union Budget presented earlier pushed the growth pedal with greater resolve.

Governor Shaktikanta Das sounded as dovish as possible when he said the accommodative stance of the monetary policy will be