CPs are unsecured, short-term debt instruments issued by corporates to finance short-term liabilities. CDs are issued by banks to meet their short-term funding requirements
There is a need to front-load rate hikes as higher long-term yields can affect private capex spend feels the MPC member
Keki Mistry of HDFC feels that the RBI's steps on Monday will bring down the short term rates by 50 bps. However, with the possibility of higher inflation going forward, repo rates may be hiked, he says.
Lower long-term rates are a key to growth, but the RBI can't cut long-term rates by tinkering with short-term rates, says Montek Singh Ahluwalia, deputy chairman of the Planning Commission.
Commercial paper and the certificates of deposit market pricing, which were earlier in the range of 8-9 percent, would certainly move beyond the cut-off in the RBI auction of short-term paper