Indian bond yields open flat ahead of RBI MPC

Money market experts said that the GDP and inflation projections will be key numbers which bond market is watching for.

Indian bond yields opened almost flat on June 6 ahead of the Reserve Bank of India's (RBI) monetary policy.

The yield on the 10-year benchmark bond opened at 6.249 percent, as compared to 6.246 percent at close in the previous trading session.

Moneycontrol's poll of economists and treasury heads showed the Monetary Policy Committee (MPC) of the RBI is likely to cut the repo rate by 25 basis points (bps).

Experts said that the lower consumer price index (CPI) for a third consecutive month, below the RBI’s medium-term target of 4 per cent, has given the central bank the elbow room to cut benchmark rates further, with a focus now on growth.

Money market experts said that the GDP and inflation projections will be key numbers the bond market is watching for.

Most economists and treasury heads said that the central bank is unlikely to change its projections on the growth front, considering the risks amid global uncertainties. However, some believe there will be a downward revision of the RBI's growth projection.

Further, experts added that the central bank may revise its inflation projection downwards on June 6 following a cooling off of inflation, particularly food inflation, which dropped to  1.78 percent in April from 2.69 percent in the previous month. The overall headline inflation has also stayed within the RBI's medium-term target.