Government Bond Yields Grew 4 bps as Monetary Policy Remains at 5.25%

Government bond yields rose four basis points on Friday after the six-member Monetary Policy Committee (MPC) opted to leave policy rates steady at 5.25%.
 
The benchmark 10-year government bond yield climbed to 6.69%, from 6.65% at the previous closing.
 
Some market participants expected the Reserve Bank of India (RBI) to announce additional open market operations.
 
While no OMOs were announced, RBI Governor Sanjay Malhotra told markets that the central bank will remain aggressive in liquidity management, ensuring adequate liquidity in the banking sector to fulfil the economy’s needs and ease monetary policy transmission.

“Liquidity management would be pre-emptive, with sufficient allowance for unanticipated fluctuations in government balances, changes in currency in circulation, forex intervention, etc,” he said.

The MPC reduced the policy repo rate by 25 basis points in December 2025, after leaving it unchanged in the previous two meetings. In June 2025, the panel implemented a rate decrease of 50 basis points.
 
The panel resolved on Friday to keep the monetary policy stance neutral. In June, the committee switched from accommodating to a neutral posture.
 
Malhotra said the present growth pace is anticipated to continue in the next few months, indicating confidence in the near-term economic outlook despite external difficulties.

The RBI raised the consumer price index (CPI) inflation forecast for FY27 upward, anticipating 4.0% in Q1 and 4.2% in Q2.
 
According to Malhotra, real GDP is expected to grow by 7.4% more than the previous year.
 
He said that future decisions would be based on impending CPI and GDP statistics, which will be released in mid to late February 2026 with new base years.

The CPI figures for January 2026 are due on February 12, using 2024 as the base year, while GDP data for FY2024 to FY2026 will be revealed on February 27, with 2022-23 as the base year. These revised data are designed to clarify current growth-inflation dynamics and offer a foundation for developing a new prognosis.

Discover the next big investment! Tradz by EquityPandits’ IPO screener helps you identify promising initial public offerings. Download Tradz by EquityPandit and get ahead of the curve! Sign Up Now & Find Your Next IPO Gem!

The post Government Bond Yields Grew 4 bps as Monetary Policy Remains at 5.25% appeared first on Equitypandit.