RBI kept its policy repo rate unchanged at 4 percent and reverse repo rate at 3.35 percent, and promised an accommodative stance as long as necessary to revive growth and come out of the Covid-19 induced stress.
RBI said it will restore the cash-reserve ratio (CRR) to its normal levels in two phases, 3.5 percent (from 3 percent now) effective March 27, and then at 4 percent from May. This would mean banks will again have to set aside money with the central bank. The special relaxation of 100 basis points was made to tide over the Covid induced stress situation last year.
There was ample assurance about comfortable liquidity in the speech. Some sections of the market were expecting an announcement of the open market operations (OMO) calendar that would spell out how many bonds the central bank would buy from the secondary market to accommodate the borrowing program. That did not happen.
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