When can RBI pause rate hikes and start cutting rates? Indranil Sengupta answers

“Bond markets are far more optimistic than the Fed. The US 10-year traditionally has a 100 bps premium to the Federal Funds rate. Now it is almost 100 bps below the Federal Funds rate. So even assuming some degree of inversion of the yield curve, clearly bond markets will need to reprise higher if the Fed sticks to even the 5.25%, not to speak of further hikes beyond.”

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