 "Siddhartha Sanyal, Barclays")
The Reserve Bank of India (RBI) maintaining status quo on the repo rate was expected, while surprising with narrowing the policy rate corridor further to plus or minus 25 basis points (bps) around the repo rate (from the hitherto plus or minus 50bps). While the headline reverse repo rate inched higher with the current move, it is important not to interpret it as an uptick in the policy rate cohort.
First, the bulk of the liquidity absorption by the RBI of late, has been through term reverse repo (mostly at 6.24 per cent) and not through the reverse repo window. Thus,
