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MUMBAI: Reserve Bank of India Governor Duvvuri Subbarao said the bank's open market operations (OMOs) to buy back government debt have limitations beyond a point.
The RBI will need to assess how liquidity is behaving before taking a view on future OMOs, he added.
He also said the government needs to focus on expenditure compression in lowering the fiscal deficit.
Subbarao was speaking in a conference call with analysts a day after the central bank cut cash reserve requirements for banks but held key interest rates steady.
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