Expert take on the week's trend: Call rates

The liquidity for the week is likely to be comfortable with call rates in the 3-3.5% range and CBLO rate convincingly below the reverse repo rate. The recent CRR hike is unlikely to put pressure on short-term yields and the LAF numbers are expected between Rs 35,000 crore and Rs 50,000 crore for the week. After the rate hike, the uncertainty in the short-end is over and yields are expected to move south.

With April-October slack season for credit offtake for the banking system and uncertainty in the long bond yields, we feel demand for short maturity assets is likely to continue. With liquid and ultra-short term outperforming the reverse repo, banks are likely to continue investing in mutual funds thus creating an indirect demand at the short end. This is expected to steepen the yield curve further.