RBI study backs view that rates impact short term bonds most1 min read 19 Dec 2018, 11:28 AM IST
An increase of 100 basis points in the policy rate, increases the yield on 15-91 days maturity treasury bills by around 85 basis points, according to researchers in the RBI
Changes to monetary policy have a stronger impact on yields of short-term bonds than on longer-dated securities. That long-held view received an emphatic backing from researchers in the Reserve Bank of India. An empirical study covering moves from April 2004 to March 2018 showed the impact of policy rate on yields weakens as the tenure of the bonds increases.