The Reserve Bank of India (RBI) on Friday unveiled a series of significant liquidity and policy measures, including Open Market Operation (OMO) purchases of ₹1 trillion, a $5 billion USD swap, and a 25 basis point repo rate cut to 5.25%. The announcements triggered an immediate reaction in the bond market, with India’s 10-year benchmark yield easing to 6.525%.
RBI Governor Shaktikanta Das confirmed that the central bank will conduct ₹1 trillion worth of OMO purchases, a move aimed at maintaining liquidity stability and supporting financial markets. The Governor also stated that a $5 billion dollar swap will be executed to enhance foreign exchange liquidity.
The liquidity measures were announced alongside a 25 bps repo rate reduction, bringing the key policy rate to 5.25%, while the Standing Deposit Facility (SDF) rate was set at 5%.
These coordinated steps are being seen as part of a broader effort to support growth while managing inflation, which the Governor described as being in a “benign phase” at 2.2%, with GDP expanding at 8% in the first half of the year.
Following the policy decision, the 10-year government bond yield fell, reflecting market expectations of improved system liquidity and lower borrowing costs.
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