Mumbai, May 30 -- The Reserve Bank of India (RBI), in its latest annual report, cautioned that domestic bond yields could face upward pressure if the global monetary easing cycle stalls or reverses due to persistent oil price shocks and fragile conditions in West Asia.

The report noted that while the government's fiscal consolidation efforts and the RBI's liquidity injections should help contain yield pressures, elevated sovereign yields may weigh on financial institutions' investment portfolios.

India's Government Securities (G-sec) yield curve steepened in FY26. Short-term yields softened thanks to monetary easing, liquidity support, and a sovereign credit rating upgrade. However, medium- and long-term yields hardened, tracking global...