New Delhi: The Reserve Bank of India (RBI) is likely to maintain status quo in the upcoming policy decision on Friday, as despite policy rate easing, government bond yields have exhibited persistent hardening in recent periods, among other reasons.
According to economists, the choice of eligible securities itself may influence the effectiveness of OMO operations, even when the aggregate quantum of liquidity injection is unchanged.
“We believe that the choice of eligible securities itself may influence the effectiveness of OMO operations, even when the aggregate quantum of liquidity injection is unchanged,” said an SBI Research report.
“RBI is thus likely to maintain status quo in the upcoming policy,” it added.
Since the last policy, one of the major policy changes is the EU-India and US-India trade deal resulting in reduction in tariffs on India to 18 per cent from 50 per cent earlier.
Clearly, India has now one of the lowest tariffs among Asian countries which will help in improving our export competitiveness, said SBI Research.
However, global economy continues to remain uncertain. Our Geo-Economics Stress Index reveals heightened uncertainty leads to economic stress with a lag of 3-4 months. Elsewhere, metal prices have recovered after witnessing a significant sell-off last week, said the SBI report.
Moreover, slack in labour market, stagnant real disposable incomes alongside reduced inflationary impact might lead to US Fed rate cuts.
Against this backdrop, Indian currency see-sawed between 89-92 per dollar for the past two month and has depreciated by 5.8 per cent against USD (most amongst the major economies) since April 2 2025, when US announced sweeping tariff hikes across economies, though it appreciated significantly (more than Re 1) after the India-US trade deal reducing the tariffs to 18 per cent.
OMOs net purchase worth Rs 6.16 lakh crore has already been done and given the current global uncertainties, “we believe RBI may have to go up to Rs 50,000 crore further OMOs purchase in the remaining part of FY to support durable liquidity quest amidst credit growth,” said the SBI report.
(IANS)
