Huge liquidity surplus unlikely to be inflationary\, say economists

Huge liquidity surplus unlikely to be inflationary, say economists

Instead of pushing up inflation, the huge surplus liquidity, bordering at Rs 7 trillion daily, is helping in policy rate transmission and aiding govt to borrow at a cheaper rate

Topics
Banking | Banking sector | Banking system

Anup Roy  |  Mumbai 

The banking system continues to remain flush with liquidity, and the Reserve Bank of India (RBI) is in a no hurry to neutralise it. High system liquidity is generally a cause for concern as it can stroke inflation, but the situation now is quite different.

Instead of pushing up inflation, the huge surplus liquidity, bordering at around Rs 7 trillion daily, is helping in policy rate transmission and aiding the government to borrow at a cheaper rate. Therefore, analysts expect this liquidty surplus mode to continue well into the next year as well, till such time the economy starts ...
First Published: Tue, September 15 2020. 18:35 IST
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