RBI Retains Overnight WACR as Key Monetary Policy Tool

The Reserve Bank of India's internal group recommends keeping the overnight Weighted Average Call Rate as the monetary policy's operating target. The group also suggested the continuation of the current liquidity management and auction mechanisms, emphasizing the importance of WACR in fostering effective monetary transmission.

The Reserve Bank of India's internal panel has recommended the continuation of the overnight Weighted Average Call Rate (WACR) as a key operating target within the country's monetary policy framework.

This decision was highlighted in the group's report, which is open for stakeholder feedback on RBI's website until August 29. The report underscores the importance of WACR in ensuring orderly money market operations and effective policy transmission.

Deputy Governor Poonam Gupta led the seven-member internal working group, which also advocates for the persistence of current liquidity management systems, including variable rate auction mechanisms for repo and reverse repo operations.

(With inputs from agencies.)