Is Govt bond yield movement hinting at a neutral financial condition?
The Reserve Bank of India (RBI) has said that movements of government bond yields over recent quarters are a signal of neutral financial conditions, which could allow businesses to raise long-term debt resources more easily and benefit the Indian economy. The flat yield curve suggests inflation expectations have been re-anchored. While the near-term yields reflect slower growth in 2023-24, RBI expects a moderate 6.5% real GDP growth in 2023-24, down from the 7% rate in 2022-23. The RBI said it sounded positive for private capex decisions, as businesses look to raise long-term resources.