Liquidity measures must back rate cuts: Jayesh Mehta

What are your views on the pre-budget meet?

Jayesh Mehta: The panel discussion was quite interesting. The host indeed helped bring out individual opinions on the markets instead of a general outlook.

Why are bond yields rising?
Jayesh Mehta: Though rate cuts have happened, the commensurate liquidity has not been provided. It (liquidity) is still at the same level when we were raising rates. We were roughly around Rs.1.5 lakh crore negative.

Will corporate borrowing costs go up instead of falling?

Jayesh Mehta: Rate cuts should be supported by the system liquidity measures, not by collateralised borrowing. Then only (rate-cut) transmission will happen on bond yields. If it does not happen, the government’s borrowing costs will go up and so will the corporate borrowing cost.