Given the massive fiscal expansion scheduled for the next financial year -- Rs 12 lakh crore of government debt papers are set to flood the market -- analysts are of the view that the RBI is likely to let the market determine the yields and may not fixate on keeping the 10-year yield below 6 per cent as it did in 2020.
This would indicate that the Reserve Bank is moving towards a new equilibrium for yields, something Governor Shaktikanta Das considers as a "public good".
The RBI left the policy rates unchanged as expected but reiterated its accommodative stance both on the interest rate as well as more importantly on the liquidity side for as long as it takes.