T-bill yields spike in Feb on rate hike possibilities

Bank of Baroda chief economist Madan Sabnavis said the higher T-bill yields reflect the dwindling banking liquidity and persistent inflationary expectations. “After the budget announcement, the 364-day yield has gone up by almost 8 basis points every week. This also can be related to surplus liquidity, which is now down to less than ₹1 lakh crore. Also, inflation fears and possible rate increase has spiked up the rate further in today’s auction,” Sabnavis said.