Liquidity will come back but RBI will keep it in deficit for the time being: Jayesh Mehta

The Reserve Bank of India (RBI) is expected to keep overnight rates more towards the Marginal Standing Facility (MSS) rather than the repo rate. The liquidity situation is expected to improve, although there may be some reduction due to the festive season. The RBI is likely to maintain a deficit for the time being and monitor inflation. The market was surprised by the announcement of OMO sales and the recreation of a 4% target.