MUMBAI: Indian government bond yields rose slightly in early trading on Monday, after the Reserve Bank of India (RBI) reiterated its commitment to meet its inflation target.

The 10-year benchmark bond yield was at 7.3736% as of 10:00 a.m. IST, after ending at 7.3626% in the previous session. “Market was still adjusting with the recent spike in oil and US yields, and minutes is further favouring the bears,” a trader with a private bank said.

The RBI’s monetary policy committee (MPC) will remain focused on aligning inflation to its target of 4%, and only after it achieves that on a sustained basis will its attention shift to the objective of growth, the minutes showed.

The RBI raised interest rates by 250 basis points in the previous fiscal, and has maintained status quo so far in this financial year, even as retail inflation has stayed above its target for months.

“The key risk to inflation remains from uncertain food and energy outlook. Though the spike in food inflation was seen as transient, members cautioned that frequent shocks could un-anchor inflation expectations,” IDFC First Bank said in a note.

India bond yields seen higher, tracking relentless rise in US peers

The 10-year US yield eased in Asia hours on Monday, but is hovering around 5% as investors remain worried about higher-for-longer interest rates, especially after as Federal Reserve Chair Jerome Powell’s comments last week.

Oil prices also fell marginally, but the benchmark Brent crude contract remains above the critical $90 per barrel mark amid supply concerns due to the ongoing conflict in the Middle East.

Traders also continue to keep an eye on the RBI’s debt sales, especially after two sources told Reuters on Friday it will conduct open market bond sales once government spending picks up and there is an improvement in the durable liquidity surplus.