RBI, bond market players discuss liquidity strategy as surplus dwindles

RBI asked for mkt views on BoP, impact of 75-bps rate hike by US Fed

At a meeting earlier this week, between officials of the Reserve Bank of India and select participants in the government bond market, a key issue that was discussed was the central bank’s future strategy on liquidity, given that surplus funds in the banking system have reduced sharply, sources said.

At the interaction, which was held prior to the next monetary policy statement on September 30, market participants and the central bank officials were said to have spoken about the feasibility of the RBI continuing with consistent variable reverse repo auctions.

“A key point in the meeting with the RBI was