After much deliberation, the RBI’s Internal Working Group on the Liquidity Management Framework has finally spoken. Reviewed? And the conclusion? That the Weighted Average Call Rate, despite being a shadow of its original self, should continue as the operating target of monetary policy. It’s a recommendation that feels less like reform and more like an exercise in defending tradition with fine print and a lot of sweat.Let’s be clear about one thing. The working group didn’t arrive at this decision blindly. It offered a detailed rationale, most of it coherent, some of it convincing, but the final recommendation remains deeply conservative in a financial landscape that has dramatically changed.
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