BS Policy poll: Pause for sure, liquidity to be back in focus at RBI

The apex bank would still like to drain out some liquidity while managing yields through OMO or operation twist, to fend off inflation, especially when rate hikes seem distant

Economists and bond market participants do not expect rate cuts anytime soon, but the Rs 12 trillion borrowing numbers outlined by the centre for the next year, and the extra Rs 80,000 crore borrowing for the remainder of this fiscal again brings back focus on liquidity operations by the Reserve Bank of India (RBI).  

The RBI has just started normalising its liquidity operations, but the huge borrowing may apply a break on that process. Nevertheless, the central bank would still like to drain out some of the liquidity, while managing yields through open market operations (OMO), or operation twist (OT),