I read in an economics article the following:
RBI Governor has decided to keep the unwinding of monetary policy gradual, calibrated, and non-disruptive while remaining supportive of the economic recovery. The potential liquidity overhang amounts to more than Rs.13 lakh crore
Can someone explain what liquidity overhang means?
I tried connecting the dots by thinking that an 'accommodative monetary policy' implies lower interest rates, which means more money circulating in the economy, i.e. more liquidity in the economy and so a liquidity 'overhang'.
Please let me know the right meaning of the term "liquidity overhang"?