Gilt yields were flat on Monday morning, with the market gearing up for another auction worth Rs 12,000 cr of government bonds. All eyes are now on the RBI’s credit policy review meeting on tuesday where the central bank is expected to keep rates steady, but lower its credit and growth targets for banks. The benchmark ten-year yield was largely unchanged at 6.91% at 12 45pm, the rate at which the paper was auctioned on Friday. Most economists expect the central bank to maintain status quo on rates front. Goldman Sachs feels the real challenge for the RBI is to continue the boost to aggregate demand in the near term, while withdrawing the large liquidity injected into the system to contain inflationary pressures in the medium term. In his policy statement, Tushar Poddar, Vice President & Chief Economist, Goldman Sachs India. expects the RBI to move from a sole focus towards boosting demand, to giving more weight to inflation. The rupee traded at 48.17 against the dollar, higher than its previous close of 48.26, with the greenback trading weak against major currencies. This is ahead of US GDP figures later in the week as the market awaits the report card on the world's biggest economy. The dollar index - gauge of the dollar’s movement against six major currencies - was down 0.3% by 12 45 pmwith global stocks rallying.

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