Indian Government Bond Yields are influenced by which of the following? 1. Actions of the United States…
Indian Government Bond Yields are influenced by which of the following? 1. Actions of the United States Federal Reserve 2. Actions of the Reserve Bank of India 3. Inflation and short-term interest rates. Select the correct answer using the code given below.
1 and 2 only
2 only
3 only
1, 2 and 3
Solution
Indian government bond yields are influenced by US Federal Reserve actions (via capital flows), RBI's monetary policy actions, and domestic inflation and short-term interest rates. All three factors matter.