According to Abheek Barua, Chief Economist at HDFC Bank, the Reserve Bank of India (RBI) has made it clear that it prefers reasonably tight liquidity conditions. The temporary measure of liquidity will likely be replaced by a more permanent system through reverse open market operations or bond sales. The RBI is also signaling vigilance on the external environment and macro stability, and is ready to use monetary policy instruments to counter emerging pressures
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