Today's inflation data was a keenly watched ahead of the RBI's Monetary Policy Review to be held on Tuesday. A higher inflation data leads to pressure on the RBI to hold repo rates, rather than cut rates and hence is a significant data point, in determining the direction of interest rates.
The economy and industrial production have been witnessing a constant decline, prompting industry observers to call for cut in interest rates. However, in the past the RBI has not been able to cut rates, as inflation in the economy continues to remain elevated.
Bond yields remained steady after the declaration of inflation data. It would be interesting to see if the RBI cuts rates, in its Monetary Policy Review to be held on Tuesday, after inflation came in slightly higher than expected.