T he MPC is scheduled to announce the interest rate decision on Feb 8, 2024. Expectations: Interest Decision No change expected, 6.25% - 6.50% - 6.75% (SDF - Repo - MSF) Policy Stance Withdrawal of Accommodation (the monetary policy stance hinges on the direction of policy rates) - Strength of the Domestic Economy gives RBI the latitude to be patient to assess evolving risks and retain the possibility of a further hike, hence no change in policy stance is expected. Liquidity management The system liquidity deficit reached a peak of 346K Crore on Jan 24. The O/N WACR was seen at 6.77%. The system liquidity has steadily improved and the WACR dropped to 6.29% on Feb 2, 2024. The reason being that market participants have taken up 250K crore through a 15 day Repo conducted by the RBI on Jan 25, 2024 and as liquidity conditions have progressively improved on month end Government spending, market participants are parking funds in SDF and the...
The specific focus of the Blog is on Global and Domestic interest rates and currencies market. I look at fundamentals to define my bias and corroborate that with a study of price action to put on high conviction trades. The views and opinions are those of author and author alone. ~ Author: Vaishali Bagchi