The RBI’s ‘operation twist’ – A sign of bigger measures to come, or a tweak to bandage the fiscal deficit?
If you’ve read financial dailies lately, it’s unlikely you’ve missed the term ’operation twist’, describing the RBI’s recent announcement that it will buy long-term Indian government bonds while selling short-term Indian government bonds through special open-market operations. A little trivia While the RBI didn’t officially come up with this name, the move reminded market observers of a similar policy move adopted by the US Fed back in 1961 (and later in 2011, under Fed Chair Ben Bernanke), dubbed ‘operation twist’, apparently inspired by American songwriter Chubby Checker’s popular number, ‘The twist’. In the context, it may be tempting to imagine RBI Chairman Shaktikanta Das grooving to yesteryear-actor Mehmood’s ‘Aoo twist karein’ from the 1960s, but this ‘twist’ isn’t probably quite as entertaining. What this is all about and the story so far On 19 December 2019, the RBI announced that it would conduct special open-market operations, buying long-term government sec...