RBI Policy
Working group moots keeping weighted avg call rate operating aim
This story was originally published at 11:55 IST on 6 August 2025
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MUMBAI – The Reserve Bank of India's working group set up to discuss the new liquidity management framework has discussed retaining the weighted average call rate as the operating target for the monetary policy, Governor Sanjay Malhotra said while detailing the outcome of the monetary policy meeting on Wednesday. Malhotra said that the report on the working framework will be uploaded on the RBI website shortly.
"The weighted average call rate (WACR) is found to be highly correlated with other overnight money market rates (TREPS and Market Repo) in the collateralised segments," Malhotra said. "Further, WACR is also found to be effective in transmitting signals to other money market instruments across maturities. Therefore, the group has recommended continuation of overnight WACR as the operating target of monetary policy," he said.
The working group has also recommended continuing with the variable repo rate auctions and reverse repo rate auctions of various tenors with the objective of maintaining the operating target rate at the policy rate, the governor said.
The Reserve Bank of India's Monetary Policy Committee Wednesday left the policy repo rate unchanged at 5.50% in a unanimous decision, the central bank Governor Sanjay Malhotra said. All six members of the committee also retained the 'neutral' policy stance.
In response to the cumulative policy repo rate cut of 100 basis points in the current easing cycle, the weighted average call rate has moderated by 108 bps as of Monday. The current Liquidity Management Framework has been operative since February 2020 and since it has been five years, a change was imminent, the governor said. End
Reported by Kabir Sharma
Edited by Akul Nishant Akhoury
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