RBI may be done with interest rate cuts, swaps markets show

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.