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Economy Mar 27, 2012

RBI to keep liquidity tight till inflation eases

The Reserve Bank of India will keep liquidity tight as long as inflation is above comfort level, Deputy Governor KC Chakrabarty said on Tuesday.

Reuters

Banks borrowed Rs 1.96 lakh crore ($38.50 billion) from the central bank's repo window on Monday, much higher than the central bank's comfort level of Rs 600 billion deficit, indicating the extent of liquidity tightness in the banking system.

Meanwhile, the government and the RBI will meet today to finalise the borrowing calendar for the first six months. The government could end up borrowing atleast Rs 3.5 lakh crore in the first half. Bond markets are eagerly awaiting this figure.

Agencies

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