The Reserve Bank of India (RBI, central bank) has scaled up its quantitative easing (QE) program and lowered its economic growth forecast as the world’s most severe wave of COVID-19 infections unfolds. out in this country.
Quantitative easing is a monetary policy in which the central bank buys bonds or securities in the market to increase the money supply and encourage lending and investment.
RBI Governor Shaktikanta Das said on June 4 that the bank would buy an additional 1.2 trillion rupees ($16.4 billion) of bonds in the next quarter under its “Government Bond Purchase Program 2.0.”
This program is implemented to keep interest rates low at a time when the Indian Government plans to borrow at a near-record scale to support the recovery of the economy.
The RBI has lowered its economic growth forecast for fiscal 2021 (ending March 2022) from the previous 10.5% to 9.5%.
The RBI’s Monetary Policy Committee (MPC) has kept the repo rate (main lending rate) at 4% and left the reverse repo rate unchanged at 3.35%.
All six MPC members voted in favor of maintaining policy support if needed until growth recovers and stabilizes.
According to Mr. Das, policy support from all sides is necessary to create a growth engine for the economy.
India’s economy continued to grow in the first quarter of 2021, but economists are increasingly concerned about the second quarter of 2021, after a second wave of COVID-19 infections broke out in the country in October. before./.
Source: Vietnam News Agency