MUMBAI: The RBI rejected all bids for 182-day and 364-day treasury bills while accepting only 91-day bills at auction on Wednesday, signalling its discomfort with rising short-term yields ahead of the monetary policy decision due Friday.The RBI sold 91-day treasury bills at a yield of 5.56%. The central bank typically rejects bids when it finds yields too high, and the move is seen as a signal that it wants interest rates to soften. The decision comes as the MPC began its meeting to decide on interest rates, with the outcome scheduled for Friday and expectations that rates will be held.Yields on govt bonds fell after the auction. This is the second instance in under three months where the RBI has cancelled treasury bill sales. Yields on one-year paper have risen by 40 basis points this fiscal due to the rupee coming under pressure.The spread between 364-day treasury bill yields and the policy rate widened to 78 basis points last week, the highest level seen in four years, indicating declining market appetite.Speaking at a Citibank conference here, SBI chairman CS Setty said a pause in interest rates at this stage would help stabilise economic conditions and support growth. He said inflation remains an important consideration for policymakers, while adding that market expectations broadly favour a pause at this juncture.Setty said investors should focus on India’s long-term structural growth rather than short-term movements in equity markets. He said India remains relatively stable amid global uncertainties such as geopolitical tensions, shifting supply chains, and changing capital flows.
