The Reserve Bank of India (RBI) may be done with interest rate cuts, swaps markets indicate, having reduced borrowing costs by 135 basis points in February to October period.
One-year interest-rate swaps surged 27 basis points to a four-month high of 5.29% on Dec. 6, following the central bank’s status quo rate decision.
Swaps essentially priced out the 25-40 basis points of reductions factored in before the rate decision.
“The market is a bit taken aback by the RBI’s shock hold and that’s getting reflected in the swaps pricing-out any more rate cuts and market participants are now focusing on inflationary pressures and fiscal slippage,” said Eugene Leow, a fixed-income strategist in DBS Bank in Singapore, according to Bloomberg.
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