From June, system became surplus in liquidity. We are keeping surplus liquidity for the monetary policy transmission.

You are suggesting one, I decided to choose the other. Why choose other options? Were you trying to manage yields on government securities? If you wanted to bring down rates, you could have chosen to cut repo rates. Liquidity management is the operating procedure from monetary policy, therefore it is implemented that way. The monetary policy framework as defined in the RBI Act is keeping price stability. What were you trying to achieve from Operation Twist? Was it just cutting interest rates? It is not clear what is the framework of the monetary policy.

From December, you have introduced Operation Twist. On the other hand, it is mentioned in the policy that liquidity is surplus and continues that way. On the one hand, you are saying rates cannot be cut right now. This step also intends to give assurance on liquidity to banks, which should encourage them, especially when they see deposit rates are ranging downwards. The idea is to help banks somehow to reduce cost of funds for the long term… so, it is at repo rate. The long-term repo operations are not intended to replace OMOs. There is space for action, and MPC will act in time, perhaps act ahead of time, as it was done in 2019.Īs you have announced long-term repos in policy (1-year and 3-year), is it only Rs1 lakh crore or will it be done systematically? Does this mean it will replace OMOs?

I said MPC will closely monitor the situation and act in a proactive manner. Inflation was full of surprises last year, especially food inflation. How should one read into that? Will there be policy action if inflation remains in the projected range of RBI? The policy statement mentions that the outlook on inflation remains uncertain. MPC has been proactive in 2019 and will continue to do so in 2020. The policy space is available for a rate cut, but it will depend on the evolving situation. So many other factors also play their role. On that basis, the monetary policy action will be taken by MPC at that time. So, once the downward slopes start, we have to see how quickly it plays out. We’re expecting headline inflation to fall. Is it enough for a rate cut action in next policy? Or are you looking at a CPI level of 5.5% or 5% to take action? Govt asks traders to expedite pulses imports from Myanmar

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