RBI faces uphill task in taming yield curve

The banking system has a surplus of Rs 8.49 lakh crore. But the overhang appears to be the borrowing pencilled in for FY22.

Synopsis

“The market is looking for explicit guidance in advance,” said Lakshmi Iyer, chief investment officer (debt) at Kotak Mahindra Asset Management Co. “There is probably a timing disconnect between RBI action and market perception. The gap needs to be plugged.”

Mumbai: The Reserve Bank of India’s Rs. 50,000 crores efforts in a week to stem the slide in bond prices went down the drain as the yields surged back past 6 percent in an environment where outlook on inflation is getting muddy and the communication is getting garbled.Intervention in the market post the monetary policy review earlier this month that led a spike in yields is giving way to pessimism that the central bank’s communication and

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