RBI’s clear articulation on liquidity management is welcome and would ensure stability in markets by enforcing the sanctity of the operating rate while addressing temporary liquidity imbalances. Money market rates would be anchored in a tighter band through the narrowing of the LAF corridor. RBI’s continued focus on inflation targeting will reinforce confidence in the Indian economy and continue to support capital inflows.

The focus on resolution of stressed assets will help in renewing confidence and boosting investment and aggregate demand going forward. Along with these, the policy also articulates other important developmental policies, such as expanding the investor base in REITs which would help to expand and deepen domestic financial markets.