Key Points
By announcing a lower-than-expected government borrowing programme, the government has done its bit by helping push down yields.Reuters..
Mumbai: The Reserve Bank of India is likely to deploy non-interest rate measures to ensure that its action of raising borrowing costs by 250 basis points since May 2022 is fully passed on to borrowers to combat rising inflation..
The central bank is likely to focus on non-rate measures for the sixth time when the Monetary Policy Committee (MPC) meets this week..
"We further expect the RBI to retain its tight liquidity stance (as signalled by the comment that they will "remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth," said Santanu Sengupta, chief India economist at Goldman Sachs...
"While the RBI's MPC is likely to keep the repo rate unchanged on February 8, we expect the first steps to address tight frictional liquidity and a more active discussion on removing the tightening bias from the guidance," said Sonal Varma and Aurodeep Nandi of Nomura's Asia Economics team..
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