FX.co ★ Indian 10Y Yield Hits Over 3-Month High

The yield on India's 10-year government securities increased to 6.6%, marking its highest point in over three months due to waning expectations of further interest rate reductions by the Reserve Bank of India. At their December meeting, the central bank reduced the repo rate by 25 basis points to 5.25%. This marked the first rate adjustment in six months, prompted by record-low inflation and stable growth—a scenario policymakers referred to as “Goldilocks.” However, the RBI has maintained a neutral approach, suggesting that this may be the final rate cut for the foreseeable future, with any subsequent support likely to be provided through liquidity operations. On Thursday, the central bank plans to purchase bonds totaling 500 billion rupees, ranging from four to 25 years in maturity, but excluding the most-traded and liquid 10-year bond. Meanwhile, global attention is centered on the Federal Reserve's policy announcement expected later today, with a predicted 25 basis point cut. Nevertheless, uncertainty persists due to concerns about potentially hawkish guidance and a more gradual pace of cuts in 2026.