As long as core inflation remains high and the U.S. Federal Reserve keeps raising rates, the Reserve Bank of India may raise its key interest rate to 6.75 percent in 2023.

The likelihood of an increase in the terminal interest rates is still 60% hike to 6.75%.

The RBI has increased the repo rate with 225 bps since May, to 6.25%. The U.S. Federal Reserve, in contrast, increased interest rates up by 425 basis points to 4.25%-4.50%

BOND YIELD IN 2023

Bansal forecasts that the benchmark 2032 bond yield of 7.26% will remain in the range of 7.00%-7.35% in the foreseeable future

In 2022, the benchmark bond yield increased by roughly 85 basis points to 7.29%.

He also chooses to add seven-year and fourteen-year bonds to his portfolio, claiming that they are far more alluring than the benchmark note of ten years.