Yields likely to be seen trending lower in near term.
FinTech BizNews Service
Mumbai, 9 December 2025: The Monetary Policy Committee (MPC) held its 58th meeting from December 3 to 5, 2025, under the chairmanship of Shri Sanjay Malhotra, Governor, Reserve Bank of India. The MPC voted unanimously to reduce the policy repo rate under the liquidity adjustment facility (LAF) to 5.25 per cent. Consequently, the standing deposit facility (SDF) rate shall stand adjusted to 5.00 per cent and the marginal standing facility (MSF) rate and the Bank Rate to 5.50 per cent. The MPC also decided to continue with the neutral stance.
Mr. Avnish Jain, Chief Investment Officer - Fixed Income, Canara Robeco Asset Management Company Limited, explains:
“The RBI Monetary Policy Committee (RBI MPC) cut repo rate by 25 bps whilst continuing with a neutral stance. While markets have been expecting RBI MPC to cut rates in December policy meet, Q2 GDP numbers printing 8.2% and weaker rupee led to some market participants expecting RBI MPC to pause and adopt a wait and watch approach. However, RBI MPC not only cut repo rate but also announced liquidity measures which includes OMO (Open Market Operations) purchase of government securities to the tune of Rs.1 lac crore and USD 5 billion WORTH of 3Y BUY/SELL swap (~Rs.45000cr of liquidity), which is likely to add durable liquidity to the system. RBI now projects FY2026 CPI inflation at 2% whilst growth projections are raised to 7.3%. For 1 HFY2027, RBI has projected a CPI inflation of 4% and thus maintained a neutral stance. Overall, it was a positive surprise on liquidity actions as well as dovish nature of policy.
Going forward, markets will look at upcoming US FED (Federal Reserve) policy, wherein a rate cut is further expected. Overall market sentiment seems to have turned positive and we may see yields trending lower in near term. Movement of USD/INR may continue to be watched by the market. Further, rate easing may depend on factors like completion of US-India trade policy, US FED actions, and currency movements. In the near term 10Y may move in 6.40%-6.50% range, with a downward bias.”
