【Mumbai】The Urjit Patel committee's estimate of a high level of retail inflation for at least one more year seems to have dimmed the hope of an interest rate cut by the Reserve Bank of India (RBI) in the near future.
In its report, made public on Tuesday, the committee, set up by RBI in September last year to review the monetary policy framework, had suggested that retail inflation replace wholesale inflation as the price anchor for determining the central bank's monetary policy stance. It also recommended a road map for bringing down the rate of retail inflation, measured by the Consumer Price Index (CPI).
The report also proposed the setting up of a monetary policy committee (MPC) to be headed by the RBI governor and be accountable for achieving the inflation target set by it.
○Bond yields rise on RBI panel's OMO talk
【Mumbai】The sentiment in the bond market was hit on Wednesday, as an expert panel set up by the Reserve Bank of India (RBI) said purchase of government bonds shouldn't be used to manage yields on government securities. It added open-market-operations (OMOs) should be used only when warranted by liquidity conditions.
In the past, RBI has occasionally used OMOs to manage volatility in bond yields. Though the central bank hasn't admitted it openly, the market has, on several instances, viewed OMOs as an instrument to manage bond yields.
【News source】
RBI panel dims hope of a rate cut this year
Patel panel wants RBI chief to head MPC
Bond yields rise on RBI panel's OMO talk
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