The Reserve Bank of India raised the repurchase rate by 50 basis points to 8 percent on July 26, double the increase forecast by most economists in a survey.
Finance Minister Pranab Mukherjee said yesterday he couldn’t say if the central bank has reached the end of the rate-rise cycle.
Anoop Verma, a fixed-income trader at Development Credit Bank in Mumbai said, “Bonds are likely to trade in a narrow range around current levels,”. “Investors are probably refraining from adding to their holdings after the rate increase as inflation is still a concern.”
According to central bank data, The yield on the 7.8 percent government debt due April 2021 fell one basis point, or 0.01 percentage point, to 8.44 percent in Mumbai, It was 8.45 percent at yesterday’s close, the highest level since May 27.
Inflation has held above 8 percent every month since the beginning of 2010. Wholesale prices rose 9.44 percent in June from a year earlier after climbing 9.06 percent the previous month, according to the latest government data issued on July 14.
The commerce ministry will publish food inflation data for the week ended . Prices rose 7.58 percent from a year earlier the previous week.