Abundant liquidity kept short-term rates soft: RBI bulletin

News:
  • RBI released its monthly bulletin
Highlights of the Bulletin:
  • With the onset of COVID-19, financial institutions were faced with liquidity stress, loss of access etc.
  • There is also a disruption of cash flows and working capital cycles.
  • RBI had deployed several conventional and unconventional tools to restore orderly conditions in financial markets .
  • The abundant, surplus liquidity in the system ensured short-term rates remained anchored and soft, relative to the policy repo rate.
  • It is aiding monetary policy transmission with positive spillovers to other segments of the market spectrum.
  • On Securities:
  • The government securities (G-secs) market remained resilient and stable owing to targeted interventions by the RBI comprising Long Term Repo Operations (LTROs), outright Open Market Operations (OMO) purchases and Operation Twists.
  • This is despite the increase in government borrowings and the significant loss of revenue due to the lockdown.
Posted by Jawwad Kazi on 14th Jul 2020
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