RBI’s Operation Twist

Operation Twist is the RBI's simultaneous selling of short-term securities and buying of long-term securities through Open Market Operations (OMO) in order to bring down long-term interest rates and bolster short-term rates.

  • It was US Federal Reserve Bank’s monetary policy which involved buying and selling of government bonds to provide monetary easing for the economy.

Impact

  • As the central bank buys long-term securities (bonds), their demand rises which in turn pushes up their prices.However, the bond yield comes down with an increase in prices (inverse relationship).
  • The interest rate in an economy is determined by yield. If yield is low, interest rates ....
Do You Want to Read More?
Subscribe Now
To get access to detailed content
Buy April 2021 Issue

Already a Member? Login here

Take Annual Subscription and get the following Advantage
The annual members of the Civil Services Chronicle can read the monthly content of the magazine as well as the Chronicle magazine archives.
Readers can study all the material before the last six months of the Civil Services Chronicle monthly issue in the form of Chronicle magazine archives.
Be an Annual Subscriber

Related Content

Indian Economy & Socio-economic Development