India’s Government Bonds Decline as Faster Inflation Predicted

India’s 10-year bonds declined on concern a report this week will show inflation accelerated, reducing room for the central bank to ease monetary policy.

The wholesale-price index probably rose 7 percent in August from a year earlier, a Bloomberg News survey of economists showed before data due Sept. 14. The gauge climbed 6.87 percent in July. The Reserve Bank of India will leave the repurchase rate unchanged at 8 percent at a review on Sept. 17, according to all 12 economists in a separate survey. The RBI last lowered the repurchase rate by 50 basis points in April.

“Inflation continues to be a concern,” said Vivek Rajpal, a fixed-income strategist in Mumbai at Nomura Holdings Inc. “We aren’t expecting any rate cut in the near term.”

The yield on the 8.15 percent notes due June 2022 rose one basis point, or 0.01 percentage point, to 8.19 percent as of 9:39 a.m. in Mumbai, according to the central bank’s trading system.

One-year interest-rate swaps, or derivative contracts used to guard against fluctuations in funding costs, climbed one basis point to 7.77 percent, according to data compiled by Bloomberg.

To contact the reporter on this story: V. Ramakrishnan in Mumbai at rvenkatarama@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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