WACR tops repo rate for first time in nearly 2 months

The weighted average call rate (WACR) has surpassed the repo rate for the first time in nearly two months, reaching 5.31%. This significant increase is attributed to a contraction in liquidity in the banking sector, which has fallen below ₹5 lakh crore. The Reserve Bank of India's actions to absorb surplus liquidity are likely to have contributed to this rise in the call rate. As government expenditures and bond sales approach, analysts predict a return to normal liquidity levels, potentially easing the pressure on the call rate.

Why it matters

The Reserve Bank of India's actions are being closely watched by the market. The rise in the weighted average call rate may indicate a tightening of liquidity in the banking sector.

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