The Reserve Bank of India (RBI) kept rates steady and left the door open for more monetary easing on Thursday, as it sought to support faltering economic growth and avoid stoking already heightened inflation levels.
Despite recent strength in India’s factory sector, the Monetary Policy Committee said economic activity in India “remains subdued and the few indicators that have moved up recently are yet to gain traction in a more broad-based manner.”
Reserve Bank of India on Friday reduced its key lending rates and extended the moratorium period for interest payments on term loans.
The government has initiated the process of borrowing with the launch of sovereign gold bonds in consultation with the Reserve Bank of India (RBI) in the current financial.
The Indian stock markets have posted major gains after the announcement of fresh liquidity measures by the Reserve Bank of India (RBI). The BSE Sensex gained 986.11 points or 3.22 percent and closed at 31,588.72 points.
The Reserve Bank of India unexpectedly cut its key deposit rate on Friday, for the second time in three weeks, to discourage banks from parking idle funds with it and spur lending instead, to revive a flagging economy amid the coronavirus lockdown.
As the coronavirus lockdown entered the second month, the government eased some restrictions, beginning this week. Simultaneously the Reserve Bank of India lowered interest rate on commercial banks deposits with it.
According to most estimates, the Indian economy will register a record contraction of over 4.5% in the current fiscal year that started on April 1 due to the pandemic.
India’s economic rebound, already weakened in recent months, could lose further momentum as coronavirus variants pose the greatest threat and inflation rises, a Reuters poll of economists found.