The liquidity surplus has dragged the average call money rate
down to close to 7 percent this month.
The Central bank halved the overnight call money rate
to 0.25 per cent and increased the 7- day and 14- day repo limits to 0.75 per cent from 0.50 per cent.
MUMBAI -- Unusual short term liquidity shortfall in the money market forced call money rate
o the overnight interest rate that a bank pays to borrow from another bank o to shoot up to a high of about 13% on Friday last week.
(EDS: CHANGING BALANCE FIGURE AND ADDING CALL MONEY RATE
The unsecured overnight call money rate
on a weighted average stood at 0.04%, unchanged from late trading on Monday.
On July 7 the Bank of Japan guided the overnight call money rate
to a historic low of 0.75 percent, below the official discount rate (ODR).
The head of the apex bank said that it was monitoring the liquidity situation and trying to keep the call money rate
close to 8 percent.
Asked to give one reason for a low evaluation, 38 economists cited the BOJ's decision in August last year to end the policy of steering the key unsecured overnight call money rate
to as close to zero as possible.
Asked to comment on the Bank of Japan's decision last week to guide the key unsecured overnight call money rate
to around 0.25% from 0.4-0.5%, Brown said he expects the easing of monetary policy to work in the economy's favor.
The previous record-low prime rate was 1.90% set March 8 to match the low seen in May and June of 1999, when the central bank took the zero-rate policy of guiding the overnight call money rate
to nearly zero.
The new rate matches the low seen in May and June of 1999, when the central bank guided the call money rate
to nearly zero.
11, the BOJ decided to scrap the policy of guiding the key short-term money market rate to near zero and raise the target for unsecured overnight call money rate
to around 0.25%.