RBI may not tinker with key rates in FY22 due to Omicron spread

May nudge market rates by managing liquidity

The Reserve Bank of India (RBI) will stay away from changing key rates — including the reverse repo rate — this fiscal in the backdrop of Omicron. However, it will continue to shape the rate movements through liquidity market operations.

Soumya Kanti Ghosh, group chief economic advisor, State Bank of India, said whether Omicron surge or not, there is not going to be any hike this year. However, the central bank may continue to shape rates through market operations.

RBI’s liquidity normalisation/¬adjustment will continue while rate hike expectations could moderate (reverse repo rate hike in February now uncertain) as Omicron risk looms,