Bonds slump after RBI panel suggests targeting CPI

Government bonds slumped in early trades on Wednesday after RBI panel suggested targeting consumer price inflation, which if accepted, may result in interest rates staying higher for long.

The benchmark 10-year yield rose 9 basis points to 8.64 per cent.

The Reserve Bank of India should make managing inflation its main policy objective and set monetary policy by committee, a central bank panel has recommended, a shift that would bring its practices in line with many other central banks.

Copyright Thomson Reuters 2014