Increasing interest rates

Markets will adjust to tighter financial conditions

The cost of money is rising. The yield on 10-year government bonds is at the highest level in over two years and has gone up by over 40 basis points since September 2021. Although normalisation of yields is necessary and healthy, it will have implications for both the government and financial markets. The cost of money is increasing because of multiple reasons. The government’s borrowing needs remain elevated, which would keep the supply of bonds at higher levels. While the inflation rate based on the consumer price index has come down and is now within the tolerance band of the