India’s benchmark government bond yield fell to 7.1529% Monday, Reuters reported, as investors awaited U.S. and Indian inflation releases for fresh evidence on the interest-rate outlook.
The yield on the 6.94% bond maturing in 2036 finished nearly four basis points below Friday’s close.
India’s Ministry of Statistics and Programme Implementation reported provisional consumer inflation of 5.54% from a year earlier in September. Food inflation was 7.74%. A Reuters poll forecast that overall inflation rose to 5.93% in October, a reading that has yet to be released.
That forecast sits just below the Reserve Bank of India’s (RBI) 6% upper tolerance limit. The bank targets 4% inflation within a 2%-6% band. The October data will show whether price growth moved closer to the top of that range after September’s reading.
Reuters linked demand for bonds to lower oil prices and hopes for progress in U.S.-Iran talks. The RBI identified high energy prices and their effect on other prices as inflation risks when it raised its repo rate by 25 basis points to 5.50% in October. India’s forthcoming inflation report covers October, before Monday’s reported oil move.
The RBI’s Monetary Policy Committee said its next action would be a rate increase or a pause, depending on economic conditions and the outlook. The upcoming inflation figures will provide new evidence before that decision; they do not establish which course the committee will take.
The U.S. Bureau of Labor Statistics is scheduled to publish October consumer price data Nov. 10 at 8:30 a.m. ET (13:30 UTC). India’s October inflation report is due Nov. 12. The RBI’s next scheduled policy meeting follows Dec. 2-4.
