System liquidity moving towards neutrality: RBI Dy Guv

Reserve Bank of India (RBI) Deputy Governor Viral Acharya on Wednesday said that surplus liquidity in the system is moving towards the neutrality objective.

"To absorb surplus liquidity in the market, the RBI has used multiple tools like reverse repo, market stability, open market sales, deployed in a calibrated quantum. Although, the system still is in surplus liquidity mode, it is moving towards the neutrality objective," Viral said at a press conference post the release of the Central bank's bi-monthly Monetary Policy Statement here.

Furthermore, Acharya said the RBI is ready to provide liquidity options to counter frictional needs, but does not intend to directly manage prices of any long term asset market.

Earlier, the RBI's six-member Monetary Policy Committee (MPC) kept the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6 percent, and the reverse repo rate at 5.75 percent.

The MPC projected inflation in the range of 4.3-4.7 percent in the second half of 2017-18, including the impact of an increase in HRA. Also, inflation for Q4 was estimated at 5.1 percent, including the HRA impact.

Furthermore, CPI inflation for 2018-19 is estimated in the range of 5.1-5.6 percent in H1, including diminishing statistical HRA impact of central government employees, and 4.5-4.6 percent in H2, with risks tilted to the upside.