India’s bond market suggests the Reserve Bank of India (RBI) is unlikely to ease rates anytime soon, despite the retail inflation sliding to an eight-year low of 1.55% in July—well under the 4% target. A key indicator is the spread between the 10-year government bond yield and the repo rate, which has widened to about 1 percentage point, the highest in 2025. Investors are skeptical about a rate cut in October, interpreting sticky yields as a sign of caution amid global uncertainties.
For investors in fixed-income instruments, this means yields remain attractive at the longer end of the curve. The RBI paused policy changes in its August MPC meeting, opting for a balanced stance rather than a preemptive cut. Experts now suggest maintaining portfolio diversification and eyeing long-duration bonds for enhanced return potential
