- Reserve Bank’s monetary policy meeting was held
- What is MPC?
- What could be RBI’s interest rate cut decision?
RBI The MPC meeting began on June 3. Reserve Bank Governor Sanjay Malhotra is said to announce the decision of the meeting on Friday, June 5. However, earlier, the RBI signaled an important move during the Treasury bill auction, raising hopes of a rate cut in the coming days.
By Times Of India According to reports, the Reserve Bank on Wednesday rejected all the bids received in the 182-day and 364-day treasury bill auctions. Only the sale of 91-day treasury bills was allowed during this period. These treasury bills were sold at a yield of 5.56%. According to market experts, the RBI is trying to control the rise in short-term bond yields.
What are you saying… RBI secretly sold 1.14 lakh crore worth of gold? Explanation from the government, what is the truth?
Why were the bids rejected?
Generally, when investor demand is too high, the Reserve Bank takes action such as rejecting bids for Treasury bills. This also signals to the market that the RBI intends to keep interest rates and treasury bill/bond yields low. Specifically,
The Reserve Bank of India (RBI) has rejected bids for Treasury bills as the Monetary Policy Committee (MPC) meets and a decision on interest rates is expected on Friday. However, the general view in the market is that the RBI will not make any change in the repo rate this time. However, this could be an important sign for the future.
The impact of this decision on the bond market
on wednesday By RBI The decision was immediately reflected in government bond yields. Following this decision, the yield on one-year government securities has risen by approximately 40 basis points. Last week, the spread between the 364-day Treasury bill yield and the repo rate touched 78 basis points, the highest level in four years. This indicates that the market demand for these securities is decreasing and investors are looking for higher returns.
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Opinion of SBI Chairman
At a Citibank event in Mumbai, SBI Chairman C. S. Shetty said keeping interest rates stable in the current scenario would be best for the overall economy. According to Shetty, inflation is a major issue, but the market expects interest rates to remain unchanged. Now we have to wait for 1 more day. The exact decision of RBI will come out on June 5.
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