Bond market signals limited room for further rate cuts

The gap between India's 10-year government bond yield and the repo rate is at 96 basis points, close to its widest in 2 years

- Abirami Sekar

India's bond market sees further rate cuts as less likely now, at least according to one indicator. The gap between India's 10-year government bond yield and the repo rate is at 96 basis points (bps), close to its widest in two years. This spread expanded as the benchmark yield rose on concerns about the near-term fiscal implications of reducing goods and services tax (GST) slabs to 5% and 18% and moving several categories to lower rates.