Bond market message

Conducting monetary policy will become more challenging

The Monetary Policy Committee (MPC) in its last meeting for the fiscal year this week is expected to examine the implications of the recently presented Union Budget, among other things on monetary policy in the coming quarters. Evolving conditions suggest that conducting monetary policy in the next fiscal year will be far more challenging. Bond yields have moved up sharply since the presentation of the Union Budget. The yield on the 10-year benchmark bonds, for instance, has gone up by 20 basis points. The Reserve Bank of India (RBI) rejected bids for part of its bond auction on Friday, which