From the last Monetary policy RBI has started publishing Post Policy Conference Call with Researchers and Analysts providing transparency.BTXtODVCQAALUaw

There are a lot of questions on the interest rates including MSF, LAF and OMOs.

You can read the full edited script on RBI Website

With reference to the above lets focus on The “term structure” of interest rates refers to the relationship between bonds of different terms. When interest rates of bonds are plotted against their terms, this is called the “yield curve”. Economists and investors believe that the shape of the yield curve reflects the market’s future expectation for interest rates and the conditions for monetary policy.

Usually, longer term interest rates are higher than shorter term interest rates. This is called a “normal yield curve” and is thought to reflect the higher “inflation-risk premium” that investors demand for longer term bonds. Continue reading