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RBI liquidity operations not meant to manage bond prices: Viral Acharya

The central bank kept its main repo rate at 6.00 percent for a third straight policy meeting and retained its "neutral" stance

Reuters  |  Mumbai/New Delhi 

rbi, urjit patel, viral acharya
Viral V Acharya, Deputy Governors RBI and Urjit Patel, Governor, RBI during a press conference announcing the RBI monetary policy in Mumbai on Wednesday - Kamlesh Pednekar

The objective of the liquidity operations conducted by the (RBI) are not to manage the price of bonds, but to drive its goals, Deputy Governor Viral Acharya, said on Wednesday after the central bank's meeting, damping expectations of bond purchases by the central bank.

The central bank kept its main repo rate at 6.00 percent for a third straight policy meeting and retained its "neutral" stance, seeking to support economic growth even as has accelerated to a 17-month high.

"Except in rare, extraordinary economy-wide circumstances, the goal of RBI's liquidity operations is not to manage directly the prices of any particular long-term asset market," Acharya said at a news conference.

The finance ministry is expected to raise its concerns about the sharp rise in bond yields when it holds a meeting this week with the central bank to discuss government borrowing plans for the year, two people familiar with the matter told Reuters on Tuesday.

One of the sources said the government would raise the idea of the buying bonds via open market operations (OMOs) to keep yields lower and inject liquidity.

 

First Published: Wed, February 07 2018. 16:16 IST