The calendar year has begun with a more decisive shift in the likely policy rate trajectory by most global central banks. The narrative of “transitory inflation” has been largely junked by most of the central banks, with policy focus shifting from the emergency settings induced by the pandemic towards the core goals of moderate inflation and macroeconomic stability. This has led to market expectations converging towards policy rate hikes by leading central banks along with unwinding of the quantitative easing (QE) programmes. The impact of the same has been felt in the domestic bond markets even as the Reserve Bank of India (RBI) policy guidance remains firm on enabling growth. At the same time, over the last quarter, the RBI has stopped adding primary liquidity and conducted frequent short tenor reverse repo auctions to signal higher short-term rates.