The RBI policy statement on Friday reminds us of the famous saga, The Bold and the Beautiful.
The policy is bold as it rightfully acknowledges inflation as a major threat and the policy is beautiful as it is mindful of growth concerns and thus has ensured calibrated interventions to support a large government borrowing programme. The yields have spiked, but we believe the market may have not factored in the implications of the newly introduced Standing Deposit Facility (SDF).
The introduction of SDF, nearly eight years after the Patel committee had propagated an independent, transparent, non-collateralised concurrent offering, is a
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