RBI's tolerance for higher yields may mean end of transmission

After years of experimentation, policy transmission has become highly effective and occurs almost in real time in money markets

Topics
Reserve Bank of India | Bond Yields | bond yield curve

Anup Roy  |  Mumbai 

The Reserve Bank of India (RBI) is now far more tolerant of higher yields at auctions than it used to be. This may have been spurred by the need to keep the market interested in local bonds and position itself for the impending tightening of rates in the overseas markets. However, this could also mean that all rates linked to the money market will adjust towards hardening.

And, this may well be the end of rate transmission of the policy, say market observers. After years of experimentation, policy transmission has become highly effective and occurs almost in real time in money markets. The ...

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First Published: Thu, July 22 2021. 22:50 IST
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