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Bond dealers and economists would keenly watch the Reserve Bank of India’s (RBI’s) stance on liquidity in the monetary policy statement on Thursday, as there seems to be a mismatch between what the central bank perceives as comfortable liquidity and what the market expects the liquidity to be to keep bond yields under check.
RBI’s Deputy Governor Viral Acharya is of the view that as long as call rates remain below the policy repo rate, the liquidity scene is comfortable. But this is disputed by the bond market, which expects the central bank to continue with its open market operations
