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Operation Twist
Why is it in the news?
- According to the RBI Governor, the market's response to the central bank's 'Operation Twist', is on expected lines.
- The objective of the programme announced last month is to moderate high long-term interest rates in the market by changing the yield curve.
More in the news
- Operation Twist?
(1) It refers to purchase and sale of government securities under Open Market Operations (OMOs) for Rs 10,000 crore each.
(2) Operation Twist is the name given to a US Federal Reserve monetary policy operation, which involves the purchase and sale of government securities to boost the economy by bringing down long-term interest rates.
- Open Market Operations?
(1)n OMOs are the market operations conducted by the RBI by way of sale and purchase of G-Secs to and from the market.
(2) Its objective is to adjust the rupee liquidity conditions in the market on a durable basis.
(3) When the RBI feels that there is excess liquidity in the market, it resorts to sale of securities thereby sucking out the rupee liquidity.
(4) When the liquidity conditions are tight, the RBI may buy securities from the market, thereby releasing liquidity into the market.
Source
The Hindu.