Changes to monetary policy have a stronger impact on yields of short-term bonds than on longer-dated securities. Photo: ReutersChanges to monetary policy have a stronger impact on yields of short-term bonds than on longer-dated securities. Key HighlightsAn increase of 100 basis points in the policy rate, increases the yield on 15-91 days maturity treasury bills by around 85 basis points. The impact reduces as the maturity increases -- around 50 basis points on 1-year securities, around 25 basis points for 5-year securities and less than 10 bps on 10-year securities. That highlights a view that unlike the policy rate, foreign portfolio investments impact longer-term yields more than shorter-term yields.

Source: Mint December 19, 2018 05:48 UTC