Finance ministry concedes inflation is causing government bond yields to riseThe Finance Ministry has blamed the recent uptick in inflation on adverse supply shocks due to the pandemic and elevated international commodity prices, and said it expects price pressures to abate in the coming months. However, the ministry did concede that high inflation has pushed up government bond yields. “However, G-sec yield curve steepened mildly owing to inflation pressures,” it added. “Pressure of high inflation prints continued to prevail on G-Sec yields in July… 10-year G-Sec yield reached 6.2% as compared to 6.05% at end-June. Suggesting that inflation was not just a problem for India, the ministry noted that high consumer price inflation had continued in advanced economies with demand heating amid persistent supply bottlenecks.

Source: The Hindu August 10, 2021 17:26 UTC