In line with international trends, the Reserve Bank has put in place a liquidity management framework in which market liquidity is managed through a mix of open market (including repo) operations (OMOs), changes in reserve requirements and standing facilities, reinforced by changes in the policy rates, including the Bank Rate and the short term (overnight) policy rate.
Grants of independence to agencies should be exceedingly rare, explicit, tightly circumscribed, and limited to those issues that clearly warrant protection from short-term political considerations. With independence comes the responsibility to provide the transparency that enables effective oversight by Congress, which, in turn, supports the Fed’s democratic legitimacy.