Govt bond yields to ease 10 bps in near term due to benign inflation, possible RBI rate cut

New Delhi, Nov 18 (SocialNews.XYZ) The benchmark 10‑year government bond yield is expected to edge lower in November and stay flat in the coming months, driven by benign inflation, lower oil prices, and possible monetary easing by the Reserve Bank of India, a report said on Tuesday.

A report from Crisil Intelligence forecasted that benchmark 10‑year government bond yields will trade between 6.43–6.53 per cent by January 31, 2026.

State development loan yields are expected to ease from 7.15 per cent to 7 per cent - 7.10 per cent range by January end while 10-year corporate bond yields may fall from 7.14 per cent to 7.05 per cent- 7.15 per cent range.

"We expect the RBI to cut the policy rate further this fiscal on account of gross domestic product (GDP) growth projections and inflation data," the report said.

India’s macro drivers and domestic consumption should support a GDP growth of 6.5 per cent in fiscal 2026, underpinned by benign inflation, GST rationalisation and income tax relief, it said.

Crisil forecasted CPI inflation to average 2.5 per cent this fiscal, as healthy agriculture growth is expected to keep food inflation in check.

Lower crude oil prices and benign global commodity prices should help contain non-food inflation, the report said.

"Our November view is based on our inflation estimates and benign oil prices, which offset the impact of geopolitical uncertainties and slowing global growth," the firm said.

In three months the yield could be influenced by market liquidity, renegotiation of US tariffs, foreign portfolio investor (FPI) inflows, rupee depreciation, the US Federal Open Market Committee (FOMC)’s decisions, global uncertainties and anticipated state and central government borrowings.

Source: IANS