India, Feb. 16 -- In December 2025, India's Monetary Policy Committee cut the Repo Rate by 25 basis points. RBI Governor Sanjay Malhotra referred to India's macroeconomic situation as a rare Goldilocks period, with low inflation at 2.2% and GDP growth at 8%. However, the Government is getting limited benefit from the Goldilocks period, as the yields on Government bonds (G-secs) have not moved down in sync with the RBI repo rate cuts. In this article, we will understand why G-secs yields have risen in the recent months despite the RBI repo rate cuts.

The RBI started the current interest rate-cutting cycle in February 2025 with a 25-basis points cut in the Repo Rate from 6.50% to 6.25%. Since then, the RBI has cut the Repo Rate multiple ti...