India: bonds rise on signal of rate continuation

Prices rose and yields dropped on India’s benchmark ten-year bonds, after central bank governor Duvvuri Subbarao signaled interest rates aren’t about to rise. Monetary policy action would only be needed if food inflation “persists for a long time,” he said. Inflation has been rising of late, with the November figure the highest for a year, although Subbarao said yesterday that food inflation was a supply-side phenomenon and that monetary policy was an “ineffective instrument” to rein in accelerating costs.

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