The MIBOR, in turn, is used as a benchmark or reference for derivative products such as interest rate swaps, forward rate agreements and term deposits and certain types of debt instruments issued by firms to raise money.
Given the declining trajectory of local inflation - particularly core inflation - it is unlikely that the Reserve Bank of India would turn to rate hikes after maintaining a status quo on rates for more than a year. What the rise in swap rates show more than anything else is heightened risk aversion and the damage done to rate cut expectations by the abrupt ratcheting up of tensions in the Middle East.
A repo, which stands for a re-purchase agreement, is in many ways the fundamental building block of money markets the world around. Essentially the transaction involves financial market players like banks borrowing and lending money overnight using government securities as collateral.
According to the latest projections provided by the RBI s Monetary Policy Committee, consumer price index inflation is seen at 4% in July-September and 4.7% in October-December of the next financial year. The central bank has repeatedly emphasized that it needs to see a durable return to 4% inflation before it can consider any change in its current tight policy.
According to the latest projections provided by the RBI s Monetary Policy Committee, consumer price index inflation is seen at 4% in July-September and 4.7% in October-December of the next financial year. The central bank has repeatedly emphasized that it needs to see a durable return to 4% inflation before it can consider any change in its current tight policy.