Indian government bonds slipped early in the session on Thursday, as traders booked profits, pushing bond bulls to the sidelines after relatively dovish minutes of the central bank’s latest meeting.
The yield on the benchmark 10-year note was at 6.4921 per cent as of 10:00 a.m. IST, after closing at 6.4799% on Wednesday. Bond yields move inversely to prices.
Market participants were anticipating the benchmark yield to hit a key technical level of 6.47 per cent in Thursday’s trade.
“We were anticipating profit booking, but it would be right from the start is a bit of a surprise, especially after the minutes have further strengthened bets of a rate cut in December,” a trader with a primary dealership said.
Members of India’s interest-rate panel flagged room for future rate cuts as the country’s inflation outlook eases, minutes of the October meeting showed on Wednesday.
“The benign outlook for headline and core inflation as a result of the downward revision of projections opens up policy space to further support growth,” Reserve Bank of India Governor Sanjay Malhotra said in the minutes.
Earlier this month, the RBI held interest rates, while two members of the rate panel favoured a change in stance to “accommodative” from “neutral”.
Retail inflation dropped to an eight-year low of 1.54 per cent in September, supporting the call for a rate cut in December.
While most economists project just a December rate cut, Nomura, MUFG and Capital Economics expect the central bank to lower the rate by 25 bps in February as well.
Barclays said the most opportune time to deliver a rate cut is December, instead of delaying it any further.
“We expect July-September CPI inflation to modestly undershoot RBI’s Q2FY25-26 CPI inflation estimate and track October CPI inflation at 0.5%,” the bank said.
RATES
India’s overnight index swaps (OIS) witnessed paying pressure in line with the rise in bond yields.
The one-year OIS rate was at 5.45%, while the two-year rate was at 5.38%. The five-year rate was at 5.61%.
Published on October 16, 2025
