Let's Twist!
"Aao twist karein, bonds ko twist karein!" RBI is on mission to work on vision, 'Operation Twist' to boost economic growth.
To flatten the yield curve, RBI will sell short term bonds and, with that money, purchase long term bonds. By purchasing long term bonds, its demand shall increase. Long term bond price shall rise and interest rate shall fall. Long term bond yield rates are set as benchmarks, so a fall in its interest rate shall boost economy.
For past quarters, RBI had reduced repo rate by 135 basis point but money transmission mechanism failed to transfer its benefits. So, weak economy is all set to get boosted with a twist!
Such twist, first, happened in US. It's US that named such specialized Open Market Operation as 'Operation Twist'. For the first time such twist shall happen in India. So let's witness how energetic the Indian Economy gets, with this twist!
"Aao twist karein, bonds ko twist karein!" RBI is on mission to work on vision, 'Operation Twist' to boost economic growth.
To flatten the yield curve, RBI will sell short term bonds and, with that money, purchase long term bonds. By purchasing long term bonds, its demand shall increase. Long term bond price shall rise and interest rate shall fall. Long term bond yield rates are set as benchmarks, so a fall in its interest rate shall boost economy.
For past quarters, RBI had reduced repo rate by 135 basis point but money transmission mechanism failed to transfer its benefits. So, weak economy is all set to get boosted with a twist!
Such twist, first, happened in US. It's US that named such specialized Open Market Operation as 'Operation Twist'. For the first time such twist shall happen in India. So let's witness how energetic the Indian Economy gets, with this twist!
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