RBI liquidity infusion boosts bonds to 3-year high.

• Indian government bond prices hit three-year highs on Tuesday due to RBI’s latest liquidity injection.

• Market participants anticipate continued durable liquidity injections this year.

• RBI plans to buy bonds worth ₹400 billion ($4.67 billion) and conduct 43-day repo for ₹1.50 trillion.

• The central bank reduced repo rate for the second consecutive time and changed its stance to accommodative.

• The RBI is expected to maintain sufficient banking system surplus to ensure policy transmission.

• Comfortable liquidity conditions are seen as a prerequisite for quicker and effective monetary policy transmission.

• 10-year benchmark bond yield fell 3 basis points to 6.41%.