By Dharamraj Dhutia
MUMBAI, Feb 8 (Reuters) - Indian government bond yields
were little changed on Wednesday as market participants awaited
the Reserve Bank of India's monetary policy decision, with a
focus on a change in stance likely setting the direction.
The benchmark 10-year yield was at 7.3110% as
of 09:50 a.m. IST, after closing at 7.3102% on Tuesday.
The RBI's Monetary Policy Committee (MPC) has raised repo
rate by 225 basis points (bps) to 6.25% since May, maintaining
its stance at "focused on withdrawal of accommodation while
continuously hiking rates".
It is likely to raise the key interest rate by 25 bps to
6.50%, a Reuters poll of economists showed.
"Stance would be the game-changer today and not the rate
action," a trader with a private bank said.
"If they move to dovish, we could retest the critical 7.26%
levels again."
More than three-quarters of economists, 40 of 52, expected
the 25-bps raise, according to the poll conducted between Jan.
13-27. The remaining 12 predicted no change at the meeting.
Traders said that if the central bank chooses to maintain
stance at withdrawal of accommodation, yields may rise.
"By not changing the policy stance to neutral, the MPC could
leave the door open for further rate hikes, if needed," said
Vivek Kumar, an economist at QuantEco Research.
The local monetary policy decision comes after the Federal
Reserve raised rates by 25 bps last week and is set to hike them
by another 50 bps until June.
The 10-year U.S. yield has jumped 25 bps, while
the two-year yield has climbed 38 bps in the last
three sessions till Tuesday as traders factoring in policy rate
above 5%.
Traders also await heavy supply as the central government is
set to raise 80 billion rupees ($967.70 million) through green
bonds on Thursday and 300 billion rupees through debt sale on
Friday.
($1 = 82.6700 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)
