RBI Monetary Policy - Oct 2021 - Views of Mr. Amar Ambani, YES SECURITIES

"RBI unanimously decided to maintain status quo on the repo rate, citing that the economic recovery requires policy support. The central bank also maintained a hold on the reverse repo, contrary to brewing expectations of a hike given the recent auction of variable repo rate at much higher yields. Nevertheless, RBI embarked on a subtle journey of policy normalisation, announcing that there is no need for a further G-Sec acquisition program. Though RBI will continue with OMOs and operation twist and will provide adequate liquidity to support growth and government market borrowings. Meanwhile, excess liquidity will be continued to be absorbed through variable reverse repo. On the policy rate outlook, RBI's end of GSAP is in line with the policy normalization process of global central banks. Tapering of bond purchases will likely be followed by a rate hike. Effectively, we think there is a strong chance of a 15-20bps hike in the reverse repo rate in the December policy meeting. A move on the repo rate will probably prevail by the end of this fiscal year, with RBI buying time before the supply and demand conditions stabilize."

Source : Equity Bulls

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RBIMonetaryPolicy Oct2021 YESSecurities