The RBI kept key policy rates unchanged to support growth, while unveiling a Rs 1lakh crore plan to purchase government bonds from banks, aimed at providing liquidity and calming financial markets.
This is the first time the RBI is directly using its balance sheet to help the government’s borrowing plan without hurting the market. It seeks to ensure sufficient liquidity in the system by funding banks to buy almost a third of the Rs 3.5 lakh crore government securities due to hit the market by June.
The monetary policy committee also held interest rates steady, promising to support the economy through an easy policy stance, but cautioned against the recent surge in Covid-19 cases and hoped the acceleration in the vaccination drive will help tackle the situation.
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