Indian government bond yields are expected to remain steady on Monday as investors focus on the Reserve Bank of India’s (RBI) bond-buying program and the upcoming U.S. Federal Reserve meeting.

Bond Market Outlook

The benchmark 10-year bond yield is expected to trade between 6.68% and 6.72%, close to its last closing level of 6.6967%, according to a private bank trader.

“There isn’t much movement expected at this level, and bond yields will likely stay sideways. Major action will depend on the Fed’s decision and comments on future interest rates,” the trader said.

Read More: Indian Bond Market Holds Firm Despite High Borrowing, RBI Support & Inflation Concerns

Global Cues: U.S. Federal Reserve Decision

The U.S. Federal Reserve is expected to keep interest rates unchanged when it announces its policy decision on Wednesday (after Indian market hours). However, investors will closely watch for the Fed’s outlook on future rate cuts.

Barclays predicts that the Fed’s new economic projections will show:

• Higher inflation and unemployment

• Lower economic growth

• A possible 25 basis points (bps) rate cut in 2025, followed by two cuts each in 2026 and 2027

Currently, financial markets expect the Fed to cut rates by 65 bps in 2025, slightly lower than the previous forecast of 75 bps. This change is due to concerns about rising inflation caused by trade tensions between the U.S. and its partners.

RBI’s Bond Purchase and Future Rate Expectations

The RBI is set to buy bonds worth ₹50,000 crore ($5.75 billion) on Tuesday, likely its final bond purchase for this financial year. Since mid-January, the RBI has added over ₹5 trillion into the banking system through bond purchases, forex swaps, and repo operations.

With India’s retail inflation dropping to 3.61% in February—its lowest level since July 2023—market experts believe the RBI could cut interest rates in April to support economic growth.

Key Market Indicators

• Brent crude oil rose 0.9% to $71.20 per barrel after gaining 1% in the previous session.

• U.S. 10-year Treasury yield stood at 4.3063%, while the 2-year yield was at 4.0191%.

• The RBI will conduct two repo auctions:

  • A four-day variable rate repo auction for ₹1 trillion

  • A one-day variable rate repo auction for ₹1 trillion

With major policy decisions ahead, traders are expected to stay cautious, and bond yields will likely remain stable in the near term.