RBI Governor Reverses repo rate

The Reserve Bank of India (RBI) is planning to reverse its expansionary monetary policy.they were looking into the repo rate for the past few months and reverse repo rate cannot be same as its operative rate, RBI governor said on April 21st.

After expansionary monetary policy, (RBI) Governor Duvvuri Subbarao, a day after the RBI lifted policy rates by 25 basis points, sent bond yield slightly advanced as investors predictable tighter liquidity and further rate increases.

The reverse repo rate is the rate at which banks lend to the Reserve Bank of India, symbols the lower border of India's interest rate corridor, with higher repo rate. When liquidity is in excess, market rates tend toward the lower end of the corridor, which is the reverse repo rate.