Jayesh Mehta, managing director and country treasurer at Bank of America Merrill Lynch, shared his views and outlook on money markets as well as on Lok Sabha election results 2019.

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“There has been enough noise and enough representation being made. I think what we have been missing in the last three-four years when we had five rate cuts in 2015-2016, I think the rate cuts and the liquidity stance is not matching. Unless you correct that, I don’t think we are moving anywhere,” Mehta said on Thursday.

“So if you have a rate cut, if you have an accommodative stance, you need to have a surplus mode in the overall liquidity in the system then only the deposit rates will come down, then only the MCLR will come down and then only the rates will come down. So if you are going to do rate cut and have a liquidity negative, your transmission is not going to happen,” he added.

“There has to be sustainability if the stance is soft. Therefore, there has to be sustainability in liquidity. Today the market needs an assurance that if you have an accommodative stance, you need to have surplus liquidity. When it comes, how it comes, leave it to Reserve Bank of India (RBI), they will do it. They know how to do it better,” said Mehta.