RBI commits to OMO calendar,
leaves key policy rates and stance unchanged
Reserve Bank of India (RBI) on Wednesday fulfilled a long-standing demand of
bond market participants of having an open market operations (OMO) calendar of
sorts, through which the central bank would commit its periodic support to the
expected, the six-member monetary policy committee kept the policy repo rate
and stance unchanged at 4 per cent, and accommodative , for as long as
necessary , respectively.
the surge in Covid-19 infections, the growth target also remained unchanged at
10.5 per cent for the fiscal, but inflation was tweaked upwards slightly. The
CPI inflation is expected to be 5 per cent for Q4FY21, 5.2 per cent in Q1FY22,
5.2 per cent in Q2FY22, 4.4 per cent in Q3FY22 and 5.1 per cent in Q4FY22 with
risks broadly balanced.
Governor Shaktikanta Das said in his monetary policy statement for April that
it will pre-announce a secondary market government securities (G-Sec)
acquisition programme to commit upfront its support to the market. For the
first quarter, it will buy bonds worth Rs 1 trillion from the secondary market,
starting April 15, when it will buy bonds worth Rs 25,000 crore.
10.55 AM, the 10-year bond yields were at 6.07 per cent, from its previous
close of 6.122 per cent.
OMO calendar of sorts is a welcome development and will help in orderly
evolution of the yield curve, said a bond trader with a foreign bank, requesting
FY21, the RBI purchased a net Rs 3.13 trillion of bonds from the market to
support the huge market borrowing programme of over Rs 12 trillion.
governor had recently assured the market that the central bank will buy at
least as much as the last financial year this time also. Besides, other
measures open up space for availability of another Rs 4 trillion in liquidity.
will also increase the scope of its variable rate reverse repo (VRRR) auctions
with increased tenure.
is part of our liquidity management and is not to be interpreted as liquidity
tightening, the RBI governor said in his remarks, streamed online, on
on-tap targeted long term repo operations (TLTRO) will continue till September
30 to help ease the liquidity needs of the system. It had come to a close on