RBI may announce more liquidity measures in Q4

THE RESERVE BANK of India’s (RBI) liquidity infusion measures, including bond purchases through open market operations (OMOs) and forex swaps, announced on December 5,may provide temporary relief, but willnot be enough, according to market participants.

- CHRISTINA TITUS

Further actions will be required in the fourth quarter, they said.

Economists expect an additional liquidity injection worth around Rs 1.5 lakh crore in the March quarter — a quarter with asubstantial currencyleakage — to ensure smooth transmission of the rate cut and offset the impact of the possible Fx intervention.

“The fourth quarter marks a high credit season and with banks already facing deposit growth constraints, the RBI should infuse more liquidity beyond Rs 1.5 lakh crore to accelerate rate-cut transmission,” said Anitha Rangan, chief economist at RBLBank.