InvestorQ : Why is the RBI likely to hike reverse repo rates in the coming credit policy and what does that imply?
Arusha Ray made post

Why is the RBI likely to hike reverse repo rates in the coming credit policy and what does that imply?

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2 months ago
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Actually, this was a suggestion made by one of the MPC members, Jayant Varma, in the last MPC meet in August 2021. Now, Citigroup estimates that RBI could raise reverse repo rates by 15-20 bps in its October 2021 policy announcement. In fact, Jayant Varma in the last MPC minutes had suggested taming inflation by raising reverse repo rates instead of repo rates.

That is not surprising. With the pandemic pain behind, Indian central bank may bite the bullet as the government is now under no commitment to continue its dovish stance. It is also quite likely that the RBI could reduce the quantum of bond buying program since financial markets are already flush with liquidity.

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