The Hindu Business Line : Call rates have `settled', says RBI Governor

THE Reserve Bank Governor, Dr Y.V. Reddy, today said the overnight call rates have `settled' with the easing of pressures on liquidity in the domestic debt market.

Call rates, which settled at around 4.75 per cent levels today, were ruling at around 6 per cent levels until last week. In fact, in early November, overnight rates had touched a high of up to 6.50 per cent.

"Call rates seem to have settled within a corridor now and this is interesting. Perhaps, the overall liquidity management is proving to be effective, and liquidity balance is where it should be," said Dr Reddy, speaking to presspersons on the sidelines of the release of the special issue of the Journal of Quantitative Economics, in memory of the late Professor Dr M.J.M. Rao.

Inflation has been driven by supply factors with some element of demand contributing to higher prices, he said.

"Where oil prices are likely to settle is a question of probability. There are some signs that there is an informed judgment about the demand and supply factors, so while geo-political uncertainties still persist, speculative activity has abated," said Dr Reddy.

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Call rates have `settled', says RBI Governor