RBI retains call rate as policy anchor in liquidity framework

To discontinue 14-day VRR and VRRR

- ANJALI KUMARI

The Reserve Bank of India (RBI) has retained the overnight weighted average call rate (WACR) as the operating target of monetary policy under a revised liquidity management framework, the central bank said in a release on Tuesday.

"The overnight WACR will continue to be the operating target of the monetary policy. The RBI will, however, continue to keep track of rates in other overnight money market segments to ensure orderly evolution of money market rates and smooth transmission," the release said. As part of operational changes, the central bank will discontinue the use of 14-day variable rate repo (VRR) and variable rate reverse repo (VRRR) as the main tools for managing short-term liquidity.