RBI Treasury Bill & Bond Auction Update: Indicative Yields Drop Slightly; T-Bills 7.0%, SDL Highest 7.56%

For next week's auction, Andhra Pradesh, Haryana, and Gujarat are among the four states offering state government bonds. Andhra Pradesh has offered the highest rate of 7.56 per cent.
RBI Treasury Bill & Bond Auction Update: Indicative Yields Drop Slightly; T-Bills 7.0%, SDL Highest 7.56%

The Reserve Bank of India (RBI) has set the indicative yields for next week's auction of its Treasury bills and state government bonds slightly lower, in line with the past two weeks, as the central bank's repo rate hikes saw a temporary pause, bringing much-needed relief to retail borrowers.

The indicative yields for three, six, and one-year durations of Treasury bills are 6.78, 6.92, and 7.0 per cent, respectively. On the other hand, the maximum yield on state development loans (SDLs) is 7.56 per cent, which matures on April 26, 2037, and is offered by Andhra Pradesh.

Four states, including Andhra Pradesh, are issuing state government bonds for next week's auction. The other states are Haryana, Gujarat, and Telangana.

Haryana is offering 7.41 per cent on SDLs maturing on April 26, 2029, Gujarat 7.49 per cent on SDLs maturing on April 26, 2030, and Telangana 7.55 per cent on SDLs maturing on April 26, 2033.

In addition, Andhra Pradesh is offering SDLs for two other durations, maturing on April 26, 2031, and April 26, 2030, with an interest rate of 7.53 per cent and 7.49 per cent, respectively.

Repo Rate Hikes

In its last monetary policy committee (MPC) meeting earlier this month, RBI decided to temporarily halt its repo rate hikes even as it keeps a close watch on inflation, which had risen alarmingly in recent times, prompting the central bank to increase the benchmark rates successively to calm price rises.

The bank loan rates typically take a cue from RBI's repo rate hike, i.e., if the benchmark rates increase, the banks also raise the lending rates, making the borrowing costs for retail customers expensive.

Taming Inflation

Over the past two years, retail inflation surged drastically, which forced the government to take stringent monetary measures to flush out the excess liquidity from the economy.

While the inflation scenario in the country has improved considerably over the past few months, RBI has not ruled out rate hikes in the future, reserving its decision for the emerging economic situation.

In the MPC minutes released on Wednesday, RBI Governor Shaktikanta Das observed that "the cumulative impact of our monetary policy actions over the last year is still unfolding and needs to be monitored closely". Das and five other members of the MPC had voted for a pause in the rate hike.

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