Investors dump India bonds after hawkish RBI minutes

A hawkish tone in the Reserve Bank of India’s ​policy minutes jolted domestic bonds on Thursday (August 20, 2026), compounding pressure from ‌rising oil prices and knocking the liquid 10-year benchmark ​to a two-month low.

The yield on ⁠the benchmark 6.94% 2036 bond climbed 5 basis points to 6.8709%, its highest since June 15. Bond yields move inversely to ‌prices.

RBI minutes released on Wednesday showed policymakers were more prepared to raise rates if inflation ‌risks materialise, with concerns mounting over higher food, fuel ‌and ⁠input costs feeding into broader price pressures.

Governor Sanjay ⁠Malhotra said that evidence of such spillovers could warrant “policy tightening.” The comments accelerated the bond selloff by reviving expectations of higher borrowing costs.

The ​MPC minutes showed a ‌path being built to eventual hikes, Tanay Dalal, economist at Axis Bank, said.

“We continue to see hikes to a 6% neutral, with room for an October move ‌opening. However, a December hike is far ​more likely,” Mr. Dalal added.