With inflation a concern, high bond yields risk costlier financing; how will RBI navigate?

After the Union Budget unveiled a record-high government borrowing programme, yields on government and corporate bonds have hardened to around three-year highs. So the ball is now in the RBI’s court to control the trajectory of sovereign borrowing costs, which are benchmarks for borrowing costs across the economy. But, with inflation risks looming large and the Fed on a tightening path, how much room does the RBI have to be accommodative at its statement on Thursday? Arvind Chari, CIO of Quantum Advisors, shares his views.