Between Dec-24 and Mar-25, the RBI will have cumulatively infused Rs 6.24 tn worth of durable liquidity via CRR cut, OMO purchases, and buy/sell FX Swap.
Download ReportQuantEco Research || Liquidity: Pivoting from scarce to ample
RBI started infusing durable liquidity since Dec-24 and has picked up pace in last few weeks, with Mar-25 scheduled for record infusion. Between Dec-24 and Mar-25, the RBI will have cumulatively infused Rs 6.24 tn worth of durable liquidity via CRR cut, OMO purchases, and buy/sell FX Swap.
As such, we project core liquidity to improve from -0.01% of NDTL in Feb-25 to 1.1% by end Mar-25. Assuming a neutral BoP for FY26, core liquidity is projected to peak around 1.9% of NDTL by Q2 FY26, before receding towards 0.6% by Q4 FY26. This could take core liquidity from a situation of scarcity (it averaged at -0.1% of NDTL over Jan-Feb 2025) to ample. Ample liquidity (juxtaposed with a likely accommodative stance by the MPC in Apr-25 policy review) will boost monetary policy transmission amidst the likelihood of a shallow rate easing cycle.