The bond market has been roiled by the government's breach of fiscal deficit target. Is it such a failure that cost of funds should rise significantly. What the Reserve Bank of India is thinking, or should do? Suyash Choudhary, head of fixed income at IDFC Mutual Fund, discusses with ET journalists what's gone wrong. Edited excerpts:
There has been a dramatic turn in the bond markets in the last two to three months without the RBI doing anything. Why?
There are two things that have contributed to the rising yields. Any central banker has three tools — commentary, liquidity and actual rate movement. Western central bankers use commentary very effectively. You can actually argue that RBI has been effectively tightening in the last six months.
