The Reserve Bank of India’s 50-basis-point rate cut in June 2025 was meant to deliver a powerful shot of monetary stimulus. Instead, it has played out like a rate hike. Bond yields across the curve have risen sharply since the policy, undermining the yield curve’s role as a “public good”, a term used byShaktikanta Das, now the Prime Minister’s Principal Secretary, during his time as RBI governor.The yield curve, he argued in a 2021 address to the Fixed Income Money Market and Derivatives Association, anchors the cost of capital for the entire economy, from the sovereign to the smallest corporate borrower. An efficient curve is critical to monetary transmission.
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